“Inflation is forecast to rise to 9.2% in 2025 due to a sharp rise in energy costs and wages.”, — write: www.unian.ua
Inflation is forecast to rise to 9.2% in 2025 due to a sharp rise in energy costs and wages.
The European Commission notes that Ukraine’s economy continued to demonstrate stability in 2024 / photo ua.depositphotos.comThe European Commission predicts that the growth of Ukraine’s economy will increase to 3.5% this year, and then decrease to 2.8% in 2025, while conditions for recovery will appear no earlier than 2026. This is stated in the forecast of the European Commission.“Despite ongoing and intensified attacks on critical infrastructure, Ukraine’s economy remains remarkably resilient so far. Thanks to a recovery in export potential, high defense spending and a recovery in household demand, growth is expected to reach 3.5% in 2024, before slowing to 2 8% in 2025,” the document says.
Given the intensification of military operations, according to forecasts, recovery will gain momentum only in 2026. Inflation is forecast to rise to 9.2% in 2025 due to a sharp rise in energy costs and wages, but should moderate in 2026 as supply-side pressures ease. Continued expenditure pressures are expected to keep the government deficit high over the forecast period.
The European Commission notes that Ukraine’s economy continued to demonstrate resilience in 2024, despite extremely difficult conditions caused by the escalation of the war of aggression by Russia, with massive destruction of energy infrastructure and labor shortages, which burdened economic activity.
In the first half of 2024, real GDP is reported to have grown by 5% year-on-year on the back of stable export performance, supported by stabilization of Black Sea export routes, easing inflation and increased investment.
At the same time, the continuation of the war is expected to hamper economic growth in 2025, and the conditions for a gradual increase in early recovery efforts will be created later than previously estimated – starting in 2026.
As a result, real GDP growth is forecast to slow in 2025 as resource constraints, including labor shortages, limited export opportunities and energy shortages, put increasing pressure on economic activity after the recovery seen in 2024.
“This forecast has extremely high uncertainty, the risks are largely tilted to the downside. Further escalation of the conflict could lead to higher resource costs, additional loss of production capacity and a further increase in the number of displaced people,” the forecast reads.
The European Commission also expects inflation to rise after its decline in 2023 – the first half of 2024. However, from June 2024, inflation began to accelerate again, partly due to a sharp increase in the cost of electricity due to attacks on infrastructure and a significant increase in wages due to labor shortages.
“While inflationary pressures are expected to persist in the near term, they are projected to gradually ease from 2025 as energy price caps and investment in energy generation are likely to reduce supply disruptions. Accordingly, it is projected that inflation will increase to 9.2% in 2025 and then slow to 7% in 2026,” the document said.
Economic forecasts for Ukraine In October, the IMF made a forecast regarding the national debt of Ukraine. The Fund believes that in 2025 this indicator will be more than 100% of the gross domestic product.
The Fund also improved the forecast of the dollar-hryvnia exchange rate until 2029. The dollar will reach 50 hryvnias in 2028, i.e. a year later than previously predicted.
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