EU releases updated forecast for Ukraine: economic outlook worsens

The European Union projects that Ukraine's economic growth will slow to 2.0% in 2025, following an estimated 2.9% in 2024. This is a downward revision from the EU's November 2024 forecast, which anticipated 2.8% growth in 2025.

According to the "European Economic Outlook: Spring 2025" report, Ukraine’s economy began to lose momentum in the second half of 2024, mainly due to Russian attacks on critical infrastructure, poor harvests, and an acute labor shortage.

In the fourth quarter of 2024, GDP growth turned slightly negative, contracting by 0.1% year-on-year.

The 2025 forecast anticipates further weakening of economic activity, as the ongoing war continues to disrupt production capacity and undermine business sentiment.

Export performance is expected to decline, reflecting sluggish industrial output, the shutdown of the Pokrovske Coal Group (a key supplier to the metallurgical sector), and a potential drop in agricultural exports.

At the same time, strong import demand—particularly for energy, coal, and materials related to defense and reconstruction—is expected to result in a negative net export contribution to GDP.

Despite these challenges, domestic demand is projected to remain resilient, buoyed by sustained government spending on defense and reconstruction.

The outlook for 2026 has also been downgraded, with projected GDP growth revised down from 5.9% to 4.7%.

The European Commission emphasizes that the forecast is subject to exceptionally high uncertainty, with risks tilted to the downside.

• By comparison, the National Bank of Ukraine, in its April 2025 outlook, forecasted real GDP growth of 3.1%, while the EBRD, in May, projected a slightly higher growth rate of 3.3%.