Ukraine’s GDP is now projected to grow by only 2.1% in 2025, down from the previously expected 3.1%, according to the National Bank of Ukraine (NBU). The central bank has revised its outlook downward due to intensified Russian attacks, ongoing migration, and worsening labor market trends. Poor weather conditions, which delayed the harvest and lowered crop yields, have also contributed to the downgrade.
The outlook for the coming years will largely depend on how the war unfolds. Under its baseline scenario, the NBU expects the Ukrainian economy to gradually return to more stable conditions, with growth of 2–3% in 2026–2027. This is a significant downward revision from its earlier forecast of 5% growth during that period.
War Remains the Key Obstacle to Growth
“The main factor slowing economic growth today is, without a doubt, the war,” says Volodymyr Dubrovsky, Senior Economist and Board Member at the Center for Social and Economic Research "CASE Ukraine."
According to Dubrovsky, economic momentum in the second half of the year has weakened due to Russia’s intensified shelling campaign, which has destroyed production facilities, infrastructure, and housing. This, in turn, has prolonged migration outflows and deepened labor market challenges. The delayed harvest and depletion of last season’s reserves have also slowed down the food industry and transport sectors.
“The business climate remains unfavorable, with growing pressure from tax and law enforcement agencies on entrepreneurs,” Dubrovsky adds.
Structural Challenges Persist
Oleksandr Bondarenko, Managing Partner at the Bureau of Investment Programs and Co-founder of the Institute of Public Efficiency, supports the NBU’s revised forecast.
“Earlier this year, I projected that GDP growth in 2025 would likely range between 2% and 2.5%,” Bondarenko says. “Why? First, we are losing 300,000 to 350,000 people annually due to emigration—primarily women and youth, including 16–17-year-old boys—as well as increased mortality. This shrinks the domestic market and suppresses consumption.”
Second, he points to the lack of investment appeal:
“Ukraine is not currently perceived as an attractive destination for investment. Official data show annual investment inflows of just €2–2.5 billion, much of which consists of financial aid and grant funding—not actual foreign direct investment (FDI) that leads to new factories or jobs. Almost no new foreign-funded projects are underway.”
Third, Ukraine continues to run a persistent trade deficit:
“Every month, Ukraine imports €3–3.5 billion more than it exports—mainly from the EU, China, and other countries. This shows that Ukrainian producers can’t meet domestic demand, either in quantity or quality, and they remain uncompetitive abroad. Even IT service exports have been falling for the second consecutive year. The total annual trade deficit is about €40 billion.”
What’s Keeping the Economy Afloat — and When Will Recovery Begin?
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Volodymyr Dubrovsky:
“Ukraine’s economy has survived solely thanks to the support of our international partners. We cannot sustain an economic war on our own—our total GDP is roughly equivalent to Russia’s annual military spending. Defense accounts for over 30% of our GDP, the highest share in the world.”
Dubrovsky believes real growth will only begin after the war ends:
“I'm not even talking about full victory—though that would be a powerful boost—but even a cessation of hostilities along the current front lines, backed by strong security guarantees, could trigger recovery. Aid would arrive, investment would follow, and some of our people would return. In the first few postwar years, GDP growth could reach up to 10%.”
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Oleksandr Bondarenko:
“Meaningful GDP growth will only come after a full reboot: structural reforms, a leaner government, a new approach to governance—and of course, a ceasefire on acceptable terms for Ukraine.”
“Only then will Ukraine become attractive to foreign investors, and only then can we expect real industrial growth. According to my estimates, this won’t happen before 2027–2028 at the earliest.”