Ukraine’s GDP grew by 1.1% y/y in January-February

Ukraine’s GDP grew by 1.1% in January-February 2025 compared to the same period in 2024. This was announced by the First Deputy Minister of Economy of Ukraine Oleksiy Sobolev, according to a press release from the Ministry of Economy.

The slightly lower start of the year reflects the uneven growth trends of the past year. At the same time, the figures currently exceed the forecasts for the first quarter.

“The slowdown in economic growth in February was caused by rocket attacks on gas production facilities and a temporary decline in exporters’ activity. At the same time, high budgetary funding for the restoration of damaged critical infrastructure, housing construction under the eRestoration and eHouse programs, as well as purchases of domestic defense products offset these negative factors,” said Oleksiy Sobolev.

In February this year, the country’s economy grew by 0.7%. This was due to the recovery in domestic (retail) trade. Consumer sentiment also continued to improve, a trend that has been observed for the fourth month in a row.

“Business recovery and support programs are contributing to the development of the manufacturing industry, in particular through international financial assistance. The production of construction materials, machinery and food products is showing positive dynamics. The defense sector is increasing its production capacity amid an expansion of defense orders. The metallurgy sector is also becoming more active, with increased production of iron, steel and rolled products,” the Ministry of Economy said.

At the same time, agriculture is experiencing a decline in livestock production due to an increase in production costs. There was also a decline in the mining industry due to rocket attacks on gas production infrastructure and a drop in transportation due to a temporary decrease in exporters’ activity.

As previously reported, Ukraine’s GDP grew by 1.5% in January 2025. Last year, growth was uneven: 6.5% y/y in the first quarter, 3.7% in the second quarter, and 2.0% in the third quarter. The GDP growth forecast included in the 2025 budget is 2.7% for the year.

The International Monetary Fund has recently lowered its forecast for Ukraine’s economic growth in 2025 by 0.5 percentage points from its previous expectations, to 2-3%. 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 key constraints to economic growth.