The National Bank of Ukraine (NBU) has downgraded its economic growth forecast for the current year to 3.6% from 4.3% in the previous macroeconomic forecast issued in October, and inflation expectations have been lowered to 8.4% from 6.9%, according to the updated macro forecast released by the regulator on Thursday.
"Considering security risks and the challenging labor market situation, the NBU has reduced its real GDP growth forecast for 2025 to 3.6%. At the same time, the NBU's baseline scenario still anticipates a gradual return of the economy to normal functioning conditions. Consequently, moderate acceleration in economic growth is expected in 2026-2027, reaching around 4%," the press release states.
The central bank noted that the lingering consequences of the war will continue to be a restraining factor for economic growth, negatively impacting the labor force deficit and the lack of productive capital. However, the recovery will be supported by investments in energy and production capacities, the maintenance of relatively soft fiscal policy, and an increase in private consumption amidst rising household incomes, emphasizes the NBU.
The regulator has revised its GDP growth forecast for 2026 downwards from 4.6% to 4%. The growth estimate for 2027 remains unchanged at 4.2%.
"In the initial months of 2025, inflation is likely to continue rising due to the ongoing influence of both temporary factors, particularly the effects of last year’s low harvests, and fundamental factors, notably pressure from business production costs. Inflation is expected to peak in the second quarter and begin decreasing from mid-year," the National Bank believes.
According to the NBU's estimates, inflation acceleration continued in January. The forecast for the consumer price index to return to the target level of 5% in 2026 and to maintain it in 2027 remains unchanged.
"It is expected that by the end of 2025, inflation will slow down to 8.4%, and in 2026 it will reach the target of 5%. This will be facilitated, in particular, by measures of interest rate and exchange rate policy of the National Bank, as well as high harvests, improvements in the energy sector, a reduction in the fiscal deficit, and moderate external price pressures," explained the central bank.