The global economy and economies’ of Ukrainian major partners in 2026

In the context of war, the Ukrainian economy is even more dependent on the state of the global economy as a whole and its largest partners in particular. Next year is expected to be a period of moderate growth amid geopolitical instability, rising protectionism, and continued weakness in the European economy.

Expectations for the global economy

The global economy continues to demonstrate resilience in the face of numerous challenges. After the turbulence of the first half of 2025, associated with trade wars and protectionist policies in the US, the situation stabilised thanks to subsequent agreements and a reduction in import duties, although global growth slowed.

Major international organizations forecast global economic growth of 3.2% y/y in 2025. This is significantly below the historical average for 2000–2019 (3.7% y/y), indicating a slowdown in global growth. It is noteworthy that in the second half of this year, the IMF and the OECD improved their forecasts for 2025 by 0.2–0.3 percentage points, mainly due to positive assessments of the prospects for US-China trade relations.

The key factors determining the development of the global economy in 2026 are:

1. Geopolitical instability. The ongoing war in Ukraine, conflicts in the Middle East, and tensions surrounding Taiwan are creating a high level of uncertainty.
2. Trade tensions and protectionism. The US tariff war and other trade conflicts are creating structural barriers to global trade: goods from markets where protective measures have been introduced are quickly redirected to less protected markets, creating a vicious cycle of trade tensions.
3. Fragmentation of the global economy. The formation of regional trade blocs is intensifying, limiting the potential for global growth.
4. Public debt pressure. By 2029, global public debt could reach 100% of world GDP. Many countries are facing the need to fill their budgets amid rising costs for servicing public debt, defense, pensions, and healthcare.
5. Reassessment of technology assets. The boom in AI investment is already being compared to the dot-com bubble of the late 1990s. The risk of a sharp revaluation of the shares of major technology corporations could create macro-financial instability.

The IMF and OECD expect global economic growth in 2026 to be 2.9–3.1% y/y. However, the number of risks and the likelihood of “black swans” remain extremely high.

It is critically important for Ukraine to understand the macroeconomic situation in countries that are key partners of the Ukrainian economy.

Weakness of the European economy

The European Union remains Ukraine’s largest economic and political partner. EU countries account for about 60% of Ukrainian exports, which makes the state of the European economy critically important.

In the third quarter of 2025, the eurozone’s GDP grew by 0.3% quarter-on-quarter, exceeding expectations. However, forecasts for the EU economy remain cautious. After strong results in the first three quarters of 2025, when European companies actively increased exports ahead of the introduction of US tariffs, growth rates are expected to slow down.

Key challenges for the European economy include:

1. Slow growth. Since 2020, the European economy has experienced multiple shocks: Brexit, the pandemic, and a sharp rise in energy prices following the start of the war in Ukraine. According to IMF estimates, the eurozone economy grew by 0.9% year-on-year in 2024, while the global economy grew by 3.3% year-on-year. Forecasts for 2025 show similar weakness in Europe compared to global growth rates – 1.2% y/y and 3.2% y/y, respectively.
2. The crisis in the German economy. Europe’s largest economy is stagnating (−0.2% y/y in 2024). The European Commission forecasts Germany’s GDP growth in 2026 at 1.2%, which is only slightly higher than 0.2% in 2025. The German economy is suffering from high energy prices, structural problems in the automotive industry, and insufficient investment in infrastructure.
3. Trade barriers. The 15% base tariffs imposed by the US on European imports (instead of 30%) still create significant obstacles for the export-oriented European economy.
4. High energy prices. According to the IEA, at the end of 2024, average electricity prices for energy-intensive industrial users in the EU were about twice as high as in the US and 50% higher than in China. A similar picture can be seen for gas prices.
5. Weak position in global competition. The EU is losing out to the US (thanks to technological leadership, investment in AI, and cheaper energy) and China (due to cheaper energy, low labor costs, government subsidies, and scale of production).
6. Institutional paralysis. The lack of political consensus and the complexity of decision-making hinder the achievement of the EU’s common goals. Bureaucracy and overregulation hinder economic activity both at the level of individual countries and the bloc as a whole.

According to the European Commission’s forecast (November 2025), the eurozone’s GDP will grow by 1.2% y/y in 2026, following 1.3% y/y in 2025. The IMF and OECD expect the eurozone economy to grow by 1-1.1% y/y in 2026, compared to 1.2% y/y at the end of this year.

The situation among the largest economies in the eurozone is mixed. According to the IMF forecast, the French economy will grow by 0.9% y/y in 2026 (after 0.7% y/y in 2025) amid political and fiscal challenges. Italy’s GDP growth will be 0.8% y/y (0.5% y/y), and Spain’s will be 2% y/y (2.9% y/y).

The supporting factors for the European economy are:

1. Decline in inflation. According to the European Commission’s forecast, inflation in the eurozone will fall to 2% y/y in 2026, which is in line with the ECB’s target. The IMF forecasts inflation at 1.9% y/y.
2. Easing of monetary policy. The ECB cut its key rate four times in 2025, from 3.15% to 2.15%, and is likely to keep it at this level for most of 2026, which will support economic activity.
3. Stable labor market. Unemployment in the eurozone remains low, supporting consumer demand.
4. Growth in consumer confidence. The consumer confidence indicator reached a ten-month high of -14.2 in October 2025, as households became less pessimistic about the future.

Trump’s Economy

In 2025, the US economy demonstrated high resilience to unpredictable decisions by its own authorities, trade conflicts, and the longest shutdown in history. The country’s GDP grew by 1.6% year-on-year in the first half of the year, largely thanks to large-scale investments in AI infrastructure.

The US economy continues to show relatively high resilience, although growth rates will slow down. While US GDP grew by 2.8% year-on-year in 2024, the IMF forecasts growth of 2% year-on-year in 2025 and 2.1% year-on-year in 2026. The OECD expects growth of 1.5% y/y next year, while the Fed has raised its forecast by 0.5 p.p. to 2.5% y/y. The basis for the latest assessment is a decline in inflation to 2.4% (although still above the Fed’s target of 2%) and an improvement in the employment situation.

Against the backdrop of a high budget deficit, growing public debt, and recession risks, most analysts expect the economy to avoid a negative scenario in 2026 thanks to the following factors:

1. Investments in AI and infrastructure. In 2025, the largest technology companies invested approximately $405 billion in AI infrastructure (compared to the initially planned $250 billion). This figure is expected to reach $432 billion in 2026, which is approximately 1.4% of GDP.
2. Fiscal stimulus. The One Big Beautiful Bill Act (OBBBA), passed in July 2025, provides for tax breaks and increased government spending, which will support growth in the first half of 2026.
3. Monetary policy easing. The Fed lowered its rate from 4.5% to 3.75% in 2025. A further decline to 3.0–3.25% is expected by the end of 2026, although the pace of easing will slow.
4. Trade truce with China. China and the US have reached a trade truce, reducing the effective tariff rate on Chinese imports from 42% to 32%. This has reduced uncertainty and may stimulate corporate capital investment.

The economic dragon

The problems facing the Chinese economy are well known: high uncertainty in trade relations with the US and rising protectionism around the world, geopolitical tensions surrounding Taiwan, huge public debt, weak domestic demand, deflationary pressure, the ongoing crisis in the real estate sector, and an aging population. However, little has been able to stop the remarkably high growth rates of the Chinese economy so far.

China’s GDP growth forecasts for 2025 are close to the government’s target of 5% y/y. In early December, the IMF upgraded its forecast for Chinese economic growth this year to 5% y/y, although in April expectations were at 4% y/y. The positive adjustment is due to the launch of further economic stimulus measures and lower-than-expected tariffs on Chinese exports. The OECD expects the Chinese economy to grow by 4.9% y/y in 2025.

The Chinese authorities are likely to set a target economic growth range of around 5% y/y for next year, for the fourth consecutive year. Currently, analysts at the IMF, World Bank, and OECD estimate China’s economic growth in 2026 to be in the range of 4.2-4.5% y/y, but a similar situation has been seen in previous years: during the forecast period, estimates have been revised upward. In early December, the IMF improved its forecast for China’s economic growth in 2026 from 4.2% to 4.5%.

The following factors could support China’s economic growth in 2026:

1. Export competitiveness. Despite US tariffs, Chinese exports showed remarkable resilience in 2025. In January–November, China increased exports by 5.4% to $3.4 trillion. The foreign trade surplus in January–November exceeded $1 trillion for the first time, reaching $1.08 trillion compared to $884.7 billion in the same period last year. Goldman Sachs expects exports to grow at a rate of 5–6% annually, which will be the main driver of growth.
2. Economic stimulus. The Chinese authorities traditionally use various tools to support high economic growth rates. In 2025, the total amount of stimulus will be approximately $1.1 trillion. The Chinese authorities will maintain an active policy aimed at stimulating consumption and investment in 2026.
3. Improved productivity. Through total automation, robotization, and the introduction of AI into manufacturing, China can significantly reduce the negative impact of an aging population on the economy.
4. Weakening influence of the real estate sector. Although the real estate sector is still far from recovery, its negative impact on the economy is diminishing.
5. Expansion of domestic demand. A partial shift to domestic consumption may offset a possible decline in exports.

Turkish economy

Turkey is an important political and trading partner of Ukraine, so the state of its economy is important for Ukraine.

In 2025, the Turkish economy is slowing down after a strong start. GDP grew by 5.3% year-on-year in the first quarter, but growth slowed in the second and third quarters, and now growth of 3.1–3.5% year-on-year is expected for the entire period.

The key problems of the Turkish economy have remained unchanged for several years:

1. High inflation. This remains the main challenge for the Turkish economy. In November 2025, annual inflation was around 31%, although this is lower than the peak in 2024 (75.5%).
2. Tight monetary policy. In December, the Turkish Central Bank set the key rate at 38% (although it had lowered it from 47.5% at the beginning of 2025), which is holding back lending and economic activity.
3. Devaluation of the lira. The Turkish lira depreciated by about 22% against the dollar in 2025, creating inflationary pressure through higher import costs. BBVA Research forecasts an exchange rate of 52 lira per dollar by the end of 2026 (compared to 45 by the end of 2025).
4. Pressure on manufacturing. Industrial production in Turkey remains under pressure due to high interest rates and cooling domestic demand. The construction sector is also facing difficulties due to expensive borrowing.
5. Geopolitical instability. Regional conflicts in the Middle East, tensions with neighboring countries, and domestic political instability pose risks to the investment climate and the economy as a whole.

The country’s economic growth will be moderate next year, as the government prioritizes price stability over short-term growth. High inflation and currency instability are reducing purchasing power, investment, and business confidence, although the weakening of the lira is making Turkish exports more competitive. The government forecasts inflation to fall to 16% by the end of 2026, while BBVA Research expects a gradual decline to 23% by the same date.

Estimates for Turkey’s GDP growth in 2026 range from 2.6% to 4% y/y. In its medium-term program (September 2025), the country’s authorities forecast growth of 3.8% y/y. The World Bank expects 3.7% y/y, while Fitch Ratings has lowered its forecast from 2.8% to 2.6% y/y.

Conclusions for Ukraine

The global macroeconomic environment in 2026 will be characterized by moderate growth in the world economy against the backdrop of ongoing war, high geopolitical uncertainty, and intensifying trade conflicts. In such conditions, one cannot expect significant growth in prices for Ukrainian export commodities.

Of particular importance for Ukraine is the state of the European economy, which will remain weak with projected growth of only 1–1.2% year-on-year. This will limit demand for Ukrainian products, especially metallurgical products.

At the same time, the relative stability of the US economy, continued growth in China, and moderate recovery in Turkey may partially compensate for the European market, albeit for a limited range of export goods.

At the same time, any serious international escalation—military, trade, or other—as well as global stock market turmoil, could significantly worsen the fragile balance of the Ukrainian economy. This is especially true given that the 2026 state budget initially includes a $19 billion (UAH 800 billion) shortfall, for which there are currently no sources to cover.

The NBU has lowered its GDP growth forecast for 2025 from 2.1% to 1.9% y/y due to energy shortages, the destruction of gas production facilities, and labor shortages, and for 2026 from 2.3% to 2% y/y. Therefore, amid continuing external challenges for Ukraine, internal factors are becoming critically important: stabilizing the situation on the front lines, ensuring energy security, supporting working businesses, and creating conditions for domestic investment.