Concorde Capital expects Ukraine’s GDP to grow by 3.8% y/y next year

Analysts’ forecasts for next year look relatively positive, with Concorde Capital expecting the Ukrainian economy to grow by 3.8% y/y in 2025. However, there are still many risks. The main one is the continuation of hostilities. Other sectoral risks include a significant negative impact on the Ukrainian steel industry due to the possible loss of mines near Pokrovsk, where coking coal is mined.

This was stated by Oleksandr Parashchiy, Head of Analytical Department at Concorde Capital, during the discussion «What Awaits the Economy in 2025? Review of forecasts from economists and authorities”, organized by the Center for Economic Strategy.

In its forecast for 2025, Concorde Capital expects the following indicators:

• Ukraine’s GDP – growth by 3.8% y/y, to $200.9 bln;
• average annual inflation forecast – 9.9% y/y, at the end of the period – 6.8% y/y;
• average annual hryvnia/dollar exchange rate – UAH 43.6, at the end of the period – UAH 46;
• international financial assistance – $39 billion;
• the NBU reserves amounted to $40 billion;

According to Paraschiy, there are no major deviations from the consensus forecast. Non-governmental analysts expect the Ukrainian economy to grow by 3.7% y/y in 2025 – to $199.5 billion and average annual inflation of 10% y/y.

Forecasts of the Ukrainian economy in 2025 by analysts of non-governmental organizations

Source: Center for Economic Strategy

“At the same time, it is very difficult to predict how the Ukrainian economy will develop if the active phase of hostilities ends in 2025. On the one hand, this reduces risks and may give an impetus to investment. On the other hand, state budget expenditures are likely to decrease. Consequently, consumer stimulus for the economy may decline, including due to a reduction in relatively high military salaries. This may even drive Ukraine into a certain crisis for some time due to lower demand. Let’s hope that such a possible crisis will not last long and the effect of investments will prevail,” the expert said.

He emphasized that one of the significant risks to the economy is the negative impact on the Ukrainian steel industry due to the situation with coking coal, as active hostilities are currently taking place near Pokrovsk, which is actually 8-10 km from the front line.

“If the aggressor continues to advance, we may lose coking coal mines. This will have an extremely negative impact on the steel industry, as 60% of the steel currently produced in Ukraine is made using coking coal from Pokrovsk. Will it be possible to replace it and, if so, won’t the cost of replacing this coking coal be so high that steelmakers will have to significantly revise their production plans? This is an asterisk question right now,” summarized Mr. Paraschiy.

As GMK Center reported earlier, the National Bank of Ukraine forecasts that the Ukrainian economy will grow by 4.3% y/y in 2025, compared to 4% y/y this year. The key forecast indicator for the NBU is inflation, which is expected to reach 7% y/y next year, compared to 10%+ y/y in 2024.

Overall, the situation in the Ukrainian economy has stabilized compared to 2022-2023. In particular, at the end of last year, expectations for Ukrainian GDP growth in 2024 were in the range of 3-5%, and in the first 10 months of 2024, the economy grew by 4.2% y/y. In previous years, the difference between the forecasts and the actual results was more significant.