ICU downgrades GDP growth forecast and improves hryvnia exchange rate forecast for 2025.
The company announced this, Ukrainian News Agency reports.
"Economic growth will remain slow, as resources for recovery – both labor and capital – will be limited in the near future. The moderate recovery will be supported by domestic private consumption due to the growth in incomes of employees in the private sector. At the same time, the reduction in government consumption will remain a key obstacle to GDP growth. For 2025, we are reducing the economic growth forecast to 2.5% due to a worse-than-expected harvest," the report says.
It is noted that the key challenge for the government now is to find USD 10-15 billion in addition to the amount of assistance that partners have already promised for 2026.
"We expect the IMF to significantly revise its baseline scenario for Ukraine in December in terms of fiscal spending and the balance of payments and to recognize the need to find additional financing," the ICU emphasized.
At the same time, the inflation trend reversed sharply in June, and price growth is expected to steadily slow down in the coming months.
The NBU's transition to a monetary policy easing cycle will be very cautious, largely due to significant imbalances in the foreign exchange market.
It is noted that the discount rate reduction by the end of the year will be 100 bp, and inflation is also expected to return to the NBU target in 2026 due to the rapid growth in prices for services.
"We are improving our forecast for the exchange rate at the end of 2025 to 42.6 UAH/USD compared to the previous forecast of 43.5 UAH/USD. The NBU has clearly demonstrated in the last year that it sees no need to weaken the hryvnia. If the government can attract an additional USD 10 billion in addition to the already announced aid amounts, these funds will also go into reserves, and the NBU will be able to keep the hryvnia exchange rate strong until the end of next year. Therefore, in 2026 we expect only a moderate weakening of the hryvnia. The NBU's reserves will increase sharply to over USD 55 billion this year, but will decrease sharply to the range of USD 40-45 billion next year," the ICU reported.
As Ukrainian News Agency earlier reported, businesses expect a decrease in the total number of employees, most significantly in construction.
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