National Bank cuts Ukraine's 2026 GDP growth forecast to 1.3% from 1.8%

The National Bank of Ukraine (NBU) expects real gross domestic product (GDP) to grow by 1.3% in 2026, down from the 1.8% forecast in its January Inflation Report and the 2% projected in October.

"In light of the weaker-than-expected Q1 results, the still-critical state of the energy system, and the accumulation of negative economic effects from the war in the Middle East, the NBU has lowered its GDP growth forecast for 2026 to 1.3%," the central bank stated in a press release on Thursday.

The NBU estimated real GDP growth in the first quarter at 0.2%, a significant drop from the 2.4% it had anticipated in January. Overall GDP growth for last year stood at 1.8%.

The central bank noted that economic activity slowed at the beginning of 2026, primarily due to the fallout from Russian attacks on energy infrastructure and logistics facilities amid an exceptionally cold winter. A restrained fiscal policy, necessitated by delays in foreign aid inflows, also exerted a downward influence.

According to NBU estimates, economic activity picked up slightly as energy deficits eased this spring. The central bank expects that catching up on budget expenditures as international aid arrives will help stimulate the economy in the coming months.

"As operating conditions for the Ukrainian economy gradually normalize and geopolitical tensions subside, real GDP growth is expected to accelerate to 2.8-3.7% in 2027-2028. This will primarily be driven by steady consumer demand, a rebound in investment activity, the restoration of the energy system, and increased agricultural yields," the NBU said.

The bank maintained its growth forecasts of 2.8% for 2027 and 3.7% for 2028.

By comparison, the International Monetary Fund (IMF) projected in its April World Economic Outlook that Ukraine’s GDP would grow by 2% in 2026 before accelerating to 3.5% in 2027. The World Bank expects a slowdown to 1.2% in 2026 from 1.8% last year, with an acceleration to 4% in 2027. Dragon Capital recently upgraded its 2026 real GDP forecast by 0.5 percentage points to 1.5%, while Fitch Ratings anticipates growth at 1.6%.