ICU downgrades Ukraine’s economic growth forecast to 3% for 2025, down from the previous outlook of 3.4%.

A report from the ICU investment company notes that Ukraine’s real GDP increased by only 2.9% in 2024, significantly below market expectations and their earlier forecasts. Economic growth weakened considerably last year due to a steep decline in the harvest, affecting both the agriculture and food sectors, as well as a reduction in government consumption triggered by a decrease in the state budget deficit to 24% of GDP from 27% the previous year.

Agricultural production is expected to rise significantly this year, unless adverse weather conditions reoccur. However, the decrease in government spending relative to GDP will continue to hinder economic recovery.

“We believe that our earlier forecast for GDP growth in 2025 was somewhat optimistic, so we are revising it down to 3%. We also do not anticipate a significant acceleration in economic recovery next year unless there is a marked improvement in the security situation,” the ICU analysts concluded.