The EBRD has downgraded its growth forecast for Ukraine's economy in 2025.

The European Bank for Reconstruction and Development (EBRD) has lowered its economic growth forecast for Ukraine in 2025 to 3.5%, a decrease from the 4.7% projected in September 2024. The bank anticipates an acceleration of economic growth to 5.0% next year, provided that hostilities come to an end.

The report highlights that, despite secured external financing for Ukraine, the country is facing a slowdown in economic growth and rising inflation due to the ongoing war. The conflict with Russia, in particular, impacts the energy infrastructure, leading to electricity shortages and high prices for imported electricity, as well as a reduction in the labor force. GDP growth has decreased from 5.0% in the first half of 2024 to about 2.0% in the second half, with an overall GDP estimate of 3.0% for 2024.

Inflation also rose in the second half of 2024, primarily due to increases in electricity prices and adjustments to regulated utility tariffs. The EBRD forecasts that annual inflation will remain at around 12% in the first half of 2025, potentially dropping to a single-digit figure by the end of the year.

Regarding the state budget, the EBRD estimates Ukraine's deficit for 2025 at 19.4% of GDP, which will be entirely financed through external loans, particularly from the EU, G7, and IMF.

Negative economic factors are likely to persist in 2025; however, positive aspects include business resilience, the operation of the Maritime Corridor, and increased government spending, particularly on defense.

Overall, the EBRD has also reduced its economic growth forecast for the entire region to 3.2%, which is 0.3% lower than anticipated in September of last year.