Analysts expect Ukraine’s GDP to grow to $226 billion in 2026

The economic situation in Ukraine is rapidly deteriorating. Economic problems that have accumulated since the beginning of the war, systematic shelling of all types of critical infrastructure, and increased tariff pressure from state monopolies have led to Ukrainian GDP growing by only 1.9% y/y in 2025 (NBU forecast) amid 2.9% y/y growth in 2024.

For next year, independent analysts forecast Ukrainian economic growth of 2.4% y/y, which is also laid down in the 2026 state budget. However, the economic outlook for next year looks significantly worse than at the beginning of 2025 due to the complete absence of new growth drivers. And although the end of the active phase of hostilities could lead to an acceleration of economic growth to 5% y/y, this remains a purely theoretical scenario for now. GMK Center investigated what the macroeconomic situation will be like in 2026.

Economic growth forecasts for 2026

The state budget for 2026 includes an economic growth forecast of 2.4% y/y. Independent analysts expect Ukraine’s GDP to grow by an average of 2.4% y/y next year, to $226 billion. The minimum growth forecast is 1% y/y, the maximum is 5% y/y in peacetime and 2.6% y/y in wartime.

Over the past few months, Ukrainian analysts have revised their GDP growth forecasts for 2026 downward due to the resumption of Russian shelling of critical infrastructure in the fall. The National Bank has lowered its GDP growth forecast for next year to 2% from 2.3% y/y, while Dragon Capital has lowered its forecast to 1% from 1.5% y/y. The World Bank led the way in terms of downward revisions, cutting its Ukrainian GDP growth forecast for 2026 to 2% from 5.2% y/y. If the year begins with such a decline in analysts’ expectations, it is highly likely that it will be difficult in every sense.

These forecasts are largely based on the assumptions that the war will continue throughout 2026, the size of the occupied territories will not change significantly, and sea and land export corridors will function smoothly throughout the period.

At the same time, two important forecasts are based on the assumption that the war will end quickly: the IMF expects Ukraine’s economy to grow by 4.5% year-on-year in 2026, while the EBRD expects it to grow by 5% year-on-year. It is unclear on what basis these estimates, made in mid-2025, are based.

Forecasts for the development of the Ukrainian economy in 2026 from independent analysts

Source: Centre for Economic Strategy

For comparison: at the end of 2024, expectations for Ukrainian GDP growth in 2025 ranged from 2% to 4.9% y/y, but by the end of the first half of the year, optimism had fallen to 2%–3.3% y/y. In fact, in the context of war, it is necessary to focus on the lower limit. In the fall of this year, the National Bank lowered its forecast for Ukrainian GDP growth in 2025 for the fourth time since the beginning of the year, from 2.1% y/y to 1.9%.

The consensus forecast of independent analysts shows the following average estimates for other macroeconomic indicators of Ukraine in 2026:

• average annual inflation – 7% y/y, at the end of the period – 6.6% y/y;
• average annual hryvnia/dollar exchange rate – UAH 43.2, at the end of the period – UAH 44.4;
• state budget deficit – $46.9 billion;
• external financing needs – $45.4 billion;
• NBU reserves – $50 billion.

Key economic risks

The key risks to economic development in 2026 are currently:

1. Continued active hostilities throughout the year. Most analysts in their forecasts for the Ukrainian economy in 2026 assume that hostilities will continue throughout the period. Optimistic scenarios predicting their cessation are also forecast, but they are not baseline.
2. Lack of growth drivers. Ukraine has exhausted its reserves of economic growth after the recovery rebound following the 2022 recession, and there are no new drivers for economic growth in the context of the war. Moreover, the accumulation of economic problems due to the war, increased shelling, and higher tariffs for state monopolies are largely blocking current economic activity and any prospects.
3. Growth of energy shortages due to shelling. The NBU expects that in the first quarter of 2026, the electricity shortage will be at the level of 4–6%. The average annual estimate of the shortage in 2026 is 3%. According to the National Bank’s estimates, the growing electricity shortage will slow GDP growth in 2026 by 0.2 percentage points. Since the beginning of 2025, the electricity shortage has been compounded by a gas shortage due to shelling of gas production facilities. The gas shortage is mainly being addressed by increasing energy imports, while periodic and systematic shelling of transmission and generation infrastructure creates higher risks than previously expected in early 2026.
4. Increasing labor shortage. According to the results of an IER survey, staff shortages are the most significant problem for businesses — 60% of respondents cited this issue, which is even higher than “dangerous working conditions” (49%) and “rising prices for raw materials and goods” (47%). Staff shortages have already become a long-term problem that will limit the ability of enterprises to increase production and even maintain current levels of economic activity.
5. Logistical risks. Systematic intensification of strikes on port and railway infrastructure, as well as shelling of civilian vessels, could at any moment complicate the already difficult conditions for maritime exports and imports.

Supporting factors

For the first time since the start of the war, the list of factors that could support economic growth does not seem substantial or clear-cut. Among these factors, the following can be noted:

1. Maintaining a high level of international financial support.  After many attempts, the European Union has found a way to allocate €90 billion to Ukraine for 2026–2027.
2. Stable consumer demand and lower inflation. Private consumption is currently the main driver of GDP growth. The National Bank expects real wages to grow by 5.6% y/y in 2026, compared to 6.2% y/y in 2025. At the same time, according to the NBU forecast, inflation will decline to 6.6% next year from 9.2% y/y in 2025.
3. Implementation of business recovery and development programs. The continuation of programs to restore war-damaged infrastructure and build protection for energy facilities is an important driver of construction development and demand for metal products. At the same time, only UAH 52 billion has been allocated for business development in the 2026 state budget, which is insufficient to support high economic growth rates in wartime conditions.
4. High growth rates in the defense industry. In particular, the share of machine building in the structure of industrial sales will increase to 9% in 2025, compared to 5.7% in 2021.
5. Higher harvest compared to 2025. This is currently a probable factor, which depends on weather and other conditions next year.

Despite the lack of clear preconditions for improvement, the economic situation in Ukraine may improve if virtually any decision on a peaceful settlement is adopted. If a sustainable truce is achieved in early 2026, Dragon Capital expects GDP growth of 5% y/y at the end of the period.