Ukraine demonstrated moderate economic growth rates for the year 2024 at 3.8%, while the real GDP growth in 2025 is expected to be around 3%, according to the annual report from the Monthly Economic Monitoring Team of Ukraine at the Institute for Economic Research and Political Consultations (IER).
“The growth in metallurgy and iron ore production was facilitated by access to the Ukrainian maritime corridor. Agricultural companies also continued to export their products both by sea and by rail. In fact, improved logistics compared to 2023 contributed to an increase in goods exports,” - explained the IER.
According to preliminary figures announced by officials, exports increased by 15% last year, while imports rose by 8%, although they remained significantly higher than exports due to the consequences of the war with the Russian Federation.
It is noted that defense orders further supported the development of machine engineering and the light industry.
Additionally, the rapid growth of wages due to labor shortages and subsequent social payments, as well as pension indexing partially funded by international aid, contributed to a noticeable revival in trade.
Despite higher inflation (11% in November compared to the previous year) and the depreciation of the national currency from 38 UAH to 42 UAH per US dollar, the NBU made efforts to maintain macroeconomic stability and increased international reserves to over $43 billion, as noted in the report.
At the same time, throughout the year, uncertainty remained high, which somewhat limited corporate investments.
According to IER surveys, the main obstacles to business activity in 2024 were “unsafe working conditions,” labor shortages, and issues with electricity access.
“Russian shelling of energy infrastructure created an electricity deficit, affecting both businesses and the population. However, this stimulated the development of distributed generation networks – over the year, such facilities have been connected with a capacity of 835 MW,” the institute's specialists emphasize.
Regarding forecasts for 2025, the IER expects that the government's and international donors' efforts to insure military risks and guarantees will be more effective, and that more investment financing will flow under the second component of UkraineFacility.
As reported, in the updated macroeconomic forecast, the investment group ICU predicts slower economic growth rates for Ukraine in 2025 – 3.4% compared to the expected GDP figure of 4% for 2024.
Also, in November of last year, the National Bank of Ukraine improved its growth forecast for the first quarter of 2025 from 1.8% to 2.3%, for the second quarter from 2.8% to 3.4%, anticipating acceleration to 4.6% in the third quarter and 6.3% in the fourth quarter, while previously it had estimated growth in the second half of the year at 5.1-5.9%. As a result, the overall GDP growth forecast for this year has been improved from 4.1% to 4.3%.