IMF downgrades Ukraine’s GDP growth forecast to 2-3% in 2025

Labor market constraints and damage to the energy infrastructure are unfavorable factors.

The International Monetary Fund (IMF) has lowered its forecast for Ukraine’s economic growth in 2025 by 0.5 percentage points from its previous expectations to 2-3%. This is stated in a press release of the institution based on the results of the mission on the seventh review of the Extended Fund Facility (EFF) program.

“Real GDP growth is estimated at 3.5 percent for 2024, but is expected to moderate to 2-3 percent in 2025, reflecting headwinds from labor constraints, damage to energy infrastructure, and the persistence of Russia’s war in Ukraine,” the statement said following the staff-level agreement (SLA).

Inflation in Ukraine, the IMF noted, continued to rise, reaching 12.9% year-on-year in January, mainly due to rising food and labor costs.

As of January 2025, gross international reserves reached $43 billion, reflecting continued large external official support.

“Risks remain exceptionally high given uncertainty on the war and the prospects for peace and recovery,” the IMF said.

As GMK Center reported earlier, last week the European Bank for Reconstruction and Development (EBRD) downgraded its forecast for Ukraine’s economic growth this year to 3.5% – in September 2024, it was expected to reach 4.7%.

In January this year, Ukraine’s GDP grew by 1.5%, maintaining positive dynamics despite challenges in the export sector. The main drivers of growth were the construction industry, manufacturing and domestic trade.

Independent analysts expect Ukraine’s GDP to increase by an average of 3.7% y/y in 2025, to $199.5 billion. The war and damage to the energy infrastructure remain the key constraints to economic growth.