**EBRD Lowers Ukraine’s 2025 Growth Forecast**
The European Bank for Reconstruction and Development (EBRD) has reduced its growth forecast for Ukraine’s economy. The bank now expects a 3.5% growth rate in 2025, down from the previously projected 4.7%.
This change comes as inflation continues to rise due to ongoing war. In December 2024, inflation reached 12%, driven by increasing electricity costs, wage hikes, and a weakening currency.
**War Affects Economy**
The EBRD has reported that Russian attacks on Ukraine’s energy infrastructure and labor shortages have slowed economic growth from 5% to just 2% in late 2024. The bank blames the war for power shortages and labor shortages, forcing Ukrainians to pay high prices for electricity and creating difficulties in finding workers.
**Growth in 2024**
Despite these challenges, Ukraine’s economy still grew by 3% in 2024. The EBRD predicts that growth could reach 5% in 2026 if the war ends this year.
**Central Bank Takes Action**
To combat inflation, Ukraine’s central bank has raised interest rates from 13% to 14.5%. This is expected to help curb inflation, which the bank previously projected would peak at 15% by mid-2025 before falling to 8.4% by year-end.
**Ukraine Receives Foreign Aid**
Ukraine has secured $38.4 billion in foreign aid to cover its budget deficit of 19.4% of GDP. This includes money from the EU, G7 countries using frozen Russian assets, and the IMF.
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