The EBRD has halved its forecast for Ukraine’s economic growth

The European Bank for Reconstruction and Development (EBRD) has halved its forecast for Ukraine’s economic growth in 2026.

The forecast appears in the EBRD report Regional Economic Prospects.

It projects that Ukraine’s real GDP will grow by 2.5% in 2026, and by up to 4% in 2027, assuming the war continues throughout 2026.

In its previous report from September 2025, the EBRD forecast 5% GDP growth in 2026, allowing for a ceasefire and Ukraine benefiting from post-war reconstruction.

The EBRD believes that even if a peace agreement is reached in early 2026, while it would significantly improve Ukraine’s outlook, electricity shortages, labor constraints, and weak agricultural output would create substantial short-term risks.

The bank stressed that Ukraine is maintaining macroeconomic stability: real GDP growth, which was 0.8% in the first half of 2025, accelerated to 2.1% in the third quarter and 3% in the fourth quarter. Overall, this implies 2% growth for all of last year, although the bank had previously expected 2.5%.

The EBRD also noted that 2025 economic performance was shaped by serious wartime constraints:

• electricity shortages;

• weaker agricultural production;

• persistent labor shortages;

• logistical constraints due to targeted Russian attacks on infrastructure.

Ukraine’s trade deficit also increased due to reduced grain exports and the expiration of the European Union’s temporary trade preferences.

Nevertheless, many sectors continued to adapt, reflecting high resilience and companies’ ability to operate effectively despite disruptions, the bank said.

The EBRD added that inflation, which rose in early 2025, fell sharply in the second half of the year thanks to tighter monetary policy, easing cost pressures, and a stable exchange rate, reaching 7.4% by the end of January 2026.

“Fiscal support remains crucial. Ukraine’s large budget deficit is fully financed by external partners, ensuring continuity of public services and defense spending and supporting broader macroeconomic stability. External financing totaling more than €110 billion for 2026–2027 is expected to contain short-term risks,” the report says.

As reported, the National Bank of Ukraine forecasts real GDP growth of 1.8% in 2026, accelerating to 2.8% in 2027.