Ukraine is sustaining macroeconomic stability in the fifth year of Russia’s war of aggression, supported by substantial and frontloaded external financing, according to a press release by the European Bank for Reconstruction and Development (EBRD). The Bank’s latest Regional Economic Prospects (REP) report, published on 3 June 2026, forecasts real GDP growth of 2.2 per cent in 2026, slightly below the 2.5 per cent projected in February. The outlook rises to an unchanged 4.0 per cent in 2027 if hostilities ease and post-war reconstruction begins. The forecast continues to depend heavily on how the war evolves and the availability of external financial support. Wartime pressures remain the dominant constraint on growth.
Real GDP growth slowed to 1.8 per cent in 2025, compared with an EBRD forecast of 2.0 per cent issued in February 2026. The economy has remained constrained by labor shortages and repeated disruptions to electricity supply and logistics caused by targeted military attacks. Industrial activity and broader supply chains have struggled under sustained strikes on energy infrastructure. These conditions have persisted into 2026, keeping growth modest despite the resilience of firms and households. Ukraine’s authorities and partners continue to navigate unprecedented operating conditions.
Inflation has begun to rise again after decelerating to 7.4 per cent in January 2026 following a period of tighter monetary policy and relative exchange-rate stability. Higher global energy prices linked to the conflict in the Middle East are adding new pressures on businesses and households. Fiscal support remains crucial to maintaining stability. Ukraine’s fiscal deficit, excluding grants, reached 23.6 per cent of GDP in 2025 and is projected to remain elevated at 19.3 per cent in 2026. These levels reflect exceptionally high defense and social spending requirements.
Committed external financing of more than €110 billion for 2026–27 is expected to contain short-term risks, underpinning macroeconomic stability. “Supporting the country’s macroeconomic stability is significant, secured and largely frontloaded external financing,” the report says. It adds that while the war continues to impose substantial human and economic costs, Ukraine’s authorities, businesses and partners have demonstrated strong capacity to stabilize the economy under unprecedented conditions. Official external support remains the principal source of financing for the wartime budget. This backing continues to anchor confidence in the country’s economic management.
The EBRD, Ukraine’s largest institutional investor, has significantly increased its support in response to the war. The Bank has made almost €10.0 billion available to Ukraine since the full-scale war began in February 2022. Its engagement has focused on bolstering energy security, vital infrastructure, food security, trade and the private sector. The trajectory toward stronger growth in 2027 hinges on an easing of hostilities and the start of reconstruction. Until then, external support and domestic resilience will remain central to Ukraine’s economic outlook.
