‘Close to stagnation’: EBRD sharply downgrades Ukraine’s economic outlook in just three months

The European Bank for Reconstruction and Development (EBRD) has significantly reduced its economic forecast for Ukraine, downgrading its real GDP growth prediction for 2026 to 1.5%, according to a report released on September 24. The previous forecast, issued in June, had projected a growth rate of 2.2%. The bank also lowered its 2027 growth forecast from 4% to 2.5%.

In its Regional Economic Prospects report, the EBRD cited multiple factors contributing to the deteriorating macroeconomic outlook in Ukraine. These include Russian strikes on ports and vessels in the Black Sea, which have disrupted shipping and logistics, as well as renewed attacks on energy infrastructure, labor shortages, low consumer confidence, and bottlenecks in the logistics sector.

While sectors such as defense production, government spending, and the resilient services sector have supported economic activity, the report notes that damage to energy infrastructure, labor shortages, low confidence, and renewed logistics constraints have hindered growth. The EBRD also highlighted a widening goods trade deficit, primarily driven by increased imports of energy and defense products.

However, alternative land and river routes are suggested as potential mitigating factors for lost deep-sea shipping capacity, while low water levels, strikes on Danube infrastructure, and shortages of rolling stock pose additional challenges. Over the past year, Ukraine has accumulated its largest natural gas reserves since the start of the full-scale war.

In its broader assessment of the emerging markets it operates in, the EBRD cut its 2026 GDP growth forecast from 3.1% to 2.5% and raised its 2027 forecast from 3.6% to 4%. The bank also revised downward its GDP growth forecasts for Russia by 0.3 percentage points for both 2026 and 2027, to 0.5% and 0.7%, respectively. Ukraine’s Economy Ministry has lowered its 2026 GDP growth forecast and is currently evaluating a scenario in which the economy expands by approximately 0.5%.