Dragon Capital has updated its macroeconomic forecast to reflect a potential peace agreement.

Ukraine’s real GDP growth in 2025 could accelerate to 3.5-5.5% if Ukraine and Russia reach an agreement on a long-term ceasefire. If the war continues, Ukraine’s economic growth will slow to 2.5%, according to the Dragon Capital team. The company has downgraded its forecast by 0.5 percentage points in both the long-term ceasefire scenario and the continued war scenario. Annual inflation is also expected to begin declining in June-July due to ongoing weakening of fundamental pressures and a high comparison base in the food segment.

“We forecast a slowdown in consumer inflation to 8.1% year-on-year by the end of 2025 in the “continued war” scenario and to 9-10% in the “truce” scenario,” the forecast states.

Regarding the hryvnia exchange rate, Dragon Capital anticipates that the NBU will return to a controlled and gradual weakening of the hryvnia in the second half of the year. Simultaneously, the NBU’s reserve forecast has been raised to $59B, and the year-end exchange rate forecast has been improved to ₴44 per $1 (-4.4% year-on-year; previous forecast – ₴45 per $1).