**Ukraine’s Economy Expected to Grow, but Challenges Remain**
The European Bank for Reconstruction and Development (EBRD) has released its latest Regional Economic Prospects report, which forecasts Ukraine’s GDP to grow by 3.3% in 2025. This is a downward revision from the previous forecast of 3.5%, due to global trade pressures and ongoing risks associated with Russia’s invasion.
Despite these challenges, the EBRD has committed over €7 billion to Ukraine since the full-scale invasion began in 2022. The Bank continues to support infrastructure, trade, food security, and the private sector through its increased engagement. In fact, the EBRD is Ukraine’s largest institutional investor.
**Growth Slows Due to War-Related Issues**
The report notes that Ukraine’s GDP growth slowed significantly in 2024, from over 5% in the first half to around 2% in the second half. This was due to Russian attacks on energy infrastructure, weak agricultural yields, and labor shortages caused by the war. Inflation also rose sharply, reaching 14.6% in March 2025.
In response to these challenges, the National Bank of Ukraine raised the key interest rate by a cumulative 250 basis points since December 2024, reaching 15.5% by early March 2025. The hryvnia, which was unpegged from the US dollar in October 2023, has lost approximately 10% of its value.
**Resilience Amid Challenges**
Despite deep challenges, the Ukrainian economy shows signs of resilience. Export volumes began recovering in 2024 after two years of sharp decline, supported by the activation of Ukraine’s Black Sea trade corridor. While sectors such as agriculture, energy production, and trade declined, others continued to grow.
External financing for 2025 is secured through EU Ukraine Facility support and G7-frozen Russian assets, covering fiscal and external gaps. Economic growth is further supported by public consumption and increased defense procurement from domestic industry.
**Looking Ahead**
The EBRD’s forecast for 2026 remains at 5%, assuming a ceasefire and acceleration of post-war reconstruction. The report highlights the importance of a peaceful resolution to the conflict for Ukraine’s economic prospects.
