The Kyiv School of Economics (KSE) has released its latest economic forecast for Ukraine in the January 2025 edition of the Ukrainian Macroeconomic Handbook. This comprehensive report provides detailed projections and analyses of Ukraine’s economic outlook amidst ongoing challenges.
Key Highlights:
Budget Financing: The report indicates that Ukraine’s budget deficit is expected to reach 17.9% of GDP in 2025. Foreign loans are projected to cover approximately 80% of the $31.9 billion state budget deficit in 2024, with continued reliance on external financing anticipated over the 2025–2027 period.
Inflation and Monetary Policy: Inflation is projected to remain high in the first half of 2025, influenced by factors such as rising electricity costs and currency depreciation. The National Bank of Ukraine has responded by increasing the policy rate, with further monetary tightening likely.
Economic Growth: Real GDP growth is forecasted at 3.5% for 2025, with potential acceleration to 5.0% in 2026, contingent upon the suspension of hostilities and other favorable conditions.
External Financing: Ukraine’s budget deficit for 2025 is projected at 19.4% of GDP, to be fully financed through $38.4 billion in external budget financing, including contributions from the EU, G7 countries, and the IMF.
