Dragon Capital analysts have lowered their 2025 GDP growth forecast for Ukraine to 2%, but a ceasefire could boost it to 5%.

Dragon Capital analysts predict that in the baseline scenario, which assumes a continuation of the war, real GDP growth in 2025 will slow to 2% compared to 0.9% in the first quarter due to the exhaustion of previous growth drivers and the loss of production capacity.

In 2026, GDP growth under this scenario is forecast at 1.5% (i.e., a further slowdown), supported by the expansion of the military-industrial complex with a projected production volume of $20B (versus $9B in 2024) and stable consumer demand. If a stable ceasefire is established from the beginning of 2026, GDP could grow to 5% due to a revival of investment, a partial return of refugees, and increased exports.

Inflation this year will slow to 9.3% by the end of the year in the baseline scenario due to reduced fundamental pressures and a high comparison base in the food segment. Inflation in 2026 will decrease to 5.3% under the continued war scenario and to 7.5% in the ceasefire scenario due to stronger demand and higher utility tariffs.