IMF Downgrades Ukraine’s Economic Growth Estimate by 2% (2025)

In its April 25 Regional Economic Outlook for Europe press conference, the International Monetary Fund (IMF) downgraded real GDP growth for Ukraine by 2.0%, marking a 0.5% decrease from its October 2024 projection.

For 2026, the IMF estimates Ukraine’s real GDP will grow by 4.5% – and by 4.8% in 2027.

In 2024, Ukraine’s economy grew by 3.5%, according to IMF data. Ukraine’s growth momentum is decelerating because of the ongoing Russian invasion.

“That is a reflection of the bombing of the energy infrastructure that is hampering the economy. It’s also reflecting a very tight labor market, and continued uncertainty of the length of the war and how the war will affect the economy,” Director of the European Department of the International Monetary Fund Alfred Kammer said during a press briefing presenting the report.

Kammer praised Ukraine for its efforts to keep the economy stable despite the ongoing war.

“I should say and emphasize again that the Ukrainian economic team – Minister of Finance, central bank governor – are doing an extraordinary job to maintain macro stability under these conditions, and also to prepare the economy for the post-war reconstruction period,” Kammer said during the press briefing.

Ukraine’s economy cannot sharply transition from a wartime economy to sudden recovery, no matter how quickly the peace negotiations develop or what demands are levied on Ukraine by foreign partners or adversaries, National Bank of Ukraine Deputy Governor Sergiy Nikolaychuk told Kyiv Post.

The impact of the end of the war on Ukraine’s economic activity will take time and require a robust security agreement with allies to give investors confidence in Ukraine’s long-term economic stability and potential for growth.

From 2022 to 2023, Ukrainian businesses were busy tackling a 30% drop in GDP, destruction of supply chains, soaring inflation, and the movement of 10 million Ukrainians within the country and five million refugees abroad.

Most Ukrainian refugees abroad were of working age, which meant Ukraine lost a chunk of employees inside the country after Russia invaded Ukraine. Internally displaced people worked on enterprises destroyed in occupied territories, and there were no similar enterprises in places far away from the front line.

Relentless air strikes have led Ukraine’s businesses to avoid large-scale, long-term projects, out of fear that their long-term investments and large-scale assets could be destroyed.

Ukraine’s energy sector has lost $14.6 billion in direct damage from Russia’s war. Key power facilities, including the Kakhovka and Dnipro Hydroelectric Power Plants (HPPs) and the Trypillia and Zmiiv Thermal Power Plants (TPPs), were destroyed by Russian attacks.

The indirect losses for the energy sector due to lost revenues, higher electricity prices, and disruptions of operations due to blackouts reached $43.1 billion, according to the Kyiv School of Economics (KSE).