EBRD cuts Ukraine growth outlook to 1.5% for 2026, 2.5% for 2027

The European Bank for Reconstruction and Development (EBRD) has revised down its projections for Ukraine's economic growth, now predicting 1.5% growth for 2026 and 2.5% for 2027 due to ongoing Russian assaults on Black Sea ports and vessels. This downgrade reflects a significant weakening of Ukraine's macroeconomic outlook, which has transitioned from slow recovery to near stagnation amid intensified Russian air attacks.

The EBRD's report indicates that key risks include prolonged disruptions to Black Sea shipping, further Russian attacks on energy infrastructure, and broader financial gaps. Despite support from defense production, public spending, and services, growth has been impeded by damaged energy infrastructure, labor shortages, declining confidence, logistical bottlenecks, and high inflation, which rose to 7.7% in July.

The central bank subsequently increased the policy rate to 15.5% to combat inflationary pressures. Ukraine's trade deficit surged due to increased imports of energy and defense goods, while export capacity suffered from Russian attacks on ports, shipping, and transport infrastructure. While alternative land and river routes can help alleviate some of the shipping losses, they cannot fully replace the deep-sea capacity and face additional challenges such as low Danube water levels and shortages of rolling stock.

Ukraine currently holds the largest amount of gas reserves in storage since 2022, but this may not be enough to prevent a potential global food price surge if exports are significantly disrupted. The National Bank of Ukraine has lowered its growth forecast for the current year to 1.1–1.2% from the previous estimate of 1.8%, and the government's draft budget for 2027 projects a weaker growth rate of 1.6%, down from earlier forecasts of 2.4%.