The European Bank for Reconstruction and Development (EBRD) forecasts that Ukraine’s real GDP will grow by 2.5% this year and accelerate to 4.0% in 2027, assuming the war continues throughout 2026, according to its Regional Economic Prospects (REP) report published Thursday morning.
“In the previous report (September 2025), a ceasefire and gains from post-war reconstruction were assumed, allowing for a projected growth rate of 5.0% in 2026,” the bank noted.
According to the report, if a peace agreement is reached in early 2026, it would significantly improve the outlook. However, electricity shortages, labor constraints, and weak agricultural production continue to pose substantial short-term risks.
The EBRD emphasized that Ukraine has maintained macroeconomic stability despite Russia’s war against the country. Real GDP growth, which stood at 0.8% in the first half of 2025, accelerated to 2.1% in the third quarter and 3% in the fourth quarter. Overall, this resulted in annual growth of 2.0% last year, although the bank had previously expected 2.5%.
The report notes that economic performance in 2025 was shaped by severe wartime constraints: electricity shortages, weaker agricultural output, and persistent labor shortages weighed on growth, while targeted Russian attacks on infrastructure created ongoing logistical bottlenecks. The trade deficit widened due to reduced grain exports and the expiration of temporary European Union trade preferences. Nevertheless, many sectors continued to adapt, reflecting strong resilience and companies’ ability to operate effectively despite disruptions, the bank said.
The EBRD also noted that inflation, which rose in early 2025, declined sharply in the second half of the year due to tighter monetary policy, easing cost pressures, and a stable exchange rate. By the end of January 2026, inflation stood at 7.4%.
“Fiscal support remains crucial. Ukraine’s large budget deficit is fully financed by external partners, ensuring the continuity of public services and defense spending, and contributing to broader macroeconomic stability. Allocated external financing exceeding €110 billion for 2026–2027 is expected to mitigate short-term risks,” the report states.
Overall, the EBRD projects growth in its regions of operation to accelerate to 3.6% in 2026 and 3.7% in 2027, compared to 3.4% in 2025 and 3.0% in 2024.
“Although uncertainty in trade and economic policy remains high, trade tensions have so far not resulted in as significant a decline in external demand as previously expected, partly due to rapid supply chain adjustments and rising demand for AI-related products,” the bank explained, noting a 0.2 percentage point upward revision to its 2025 growth estimate compared to the September report.
