The European Bank for Reconstruction and Development (European Bank for Reconstruction and Development) has lowered its forecast for Ukraine’s real GDP growth in 2026 to 2.2% due to the prolonged war, while noting that macroeconomic stability is being maintained thanks to external support.
“This is slightly below the 2.5% forecast published in February, but if hostilities ease and post-war reconstruction begins, the 2027 forecast remains unchanged at 4.0%,” the report “Regional Economic Prospects” (REP) states, published on Wednesday.
The bank emphasizes that Ukraine continues to maintain macroeconomic stability even in the fifth year of Russia’s full-scale war, thanks to significant external financing. However, the outlook remains heavily dependent on the course of the war and the availability of external financial support.
The main downside risk to the forecast is linked to an energy crisis caused by the conflict in the Middle East, which could significantly worsen Ukraine’s already fragile energy situation.
The slowdown in economic growth to 1.8% in 2025 and the weak start to this year are attributed to wartime constraints: labor shortages and ongoing attacks on energy infrastructure have disrupted industrial activity and logistics, while broader supply issues have limited production.
The bank also notes that inflation has begun rising again after slowing to 7.4% in January 2026, following a period of tighter monetary policy and relative exchange rate stability. Higher global energy prices linked to the Middle East conflict are adding further pressure, increasing costs for businesses and households and contributing to renewed inflationary momentum.
According to the EBRD, fiscal support remains crucial. Ukraine’s budget deficit, excluding grants, reached 23.6% of GDP in 2025 and is expected to remain elevated at 19.3% in 2026, reflecting extremely high spending on defense and social services. These needs are largely financed through external official support, which continues to underpin macroeconomic stability. More than €110 billion in external financing is expected for 2026–2027, helping to contain short-term risks.
The bank notes that it is the largest institutional investor in Ukraine and has significantly increased its support in response to the full-scale war: since February 2022, the EBRD has allocated nearly €10 billion to the country.
