The National Bank of Ukraine (NBU) has downgraded its macroeconomic outlook for 2026–2028. According to the regulator’s forecast, Ukraine’s real GDP will contract by 0.4% this year, while inflation will accelerate to 12.5%. Furthermore, due to intensifying Russian attacks and the blockade of ports, the economy is projected to lose 1.9 percentage points of potential growth in 2026, with the foreign trade balance set to decline by $6.6 billion. These findings are detailed in the NBU’s October Inflation Report.
The regulator’s forecast anticipates a gradual economic recovery starting in 2027; however, the pace of this recovery will remain subdued due to the destruction of production, energy, and logistics infrastructure.
Outlook for Inflation and Economic Growth
The NBU estimates that inflation will reach 12.5% in 2026. Key drivers for this acceleration in price growth include rising fuel costs, increased business expenses resulting from infrastructure destruction, and an expansion of fiscal stimulus measures toward the end of the year. In subsequent years, inflation is expected to gradually decelerate—falling to 7.3% by the end of 2027 and to 5% in 2028. Meanwhile, the outlook for economic growth remains modest:
2026: A 0.4% contraction in real GDP;
2027: 0.4% growth;
2028: An acceleration in growth to 2.2%. In 2027, economic recovery will be supported by government investment in the defense industry and critical infrastructure. For 2028, the NBU anticipates a revival in consumer demand, higher crop yields, and an uptick in private investment. To curb inflation, the regulator raised the key policy rate from 15% to 16.5% between July and October. Future decisions will depend on the dynamics of price pressures and economic activity. Shelling and the blockade of ports are set to cost the economy $6.6 billion. According to the NBU, the intensification of Russian attacks on enterprises and infrastructure, combined with the port blockade, has significantly worsened Ukraine’s economic outlook.
The cumulative negative impact of these factors during the third and fourth quarters of 2026 will result in the following:
real GDP will be 1.9 percentage points lower than it would have been without the intensified attacks and the blockade;
annual inflation will be 0.7 percentage points higher;
losses in the foreign trade balance will reach $6.6 billion, primarily due to a decline in agricultural exports.
The negative impact of the destruction on production, logistics, and prices will persist into 2027. Wages will continue to rise, but labor shortages will remain. Despite a slowdown in economic activity and reduced business demand for labor, the NBU expects a structural labor shortage to persist, driven by mobilization and migration. According to the regulator’s forecast, the net outflow of the population in 2026–2027 will amount to approximately 200,000 people annually. In 2028, the return of about 100,000 migrants is expected, provided that security risks decrease.
At the same time, labor shortages will continue to drive wage growth:
in 2026, real wages are projected to increase by 11.4%;
in 2027–2028, the growth rate is expected to slow to 4–5% per year.
The budget deficit could rise to 37% of GDP in 2027.
The National Bank forecasts a significant fiscal burden over the coming years. The state budget deficit—excluding grants—is projected to reach approximately 35% of GDP in 2026 and 37% in 2027. By 2028, it is expected to narrow to 20% of GDP. International financial assistance will remain the primary source for covering the deficit.
Specifically, the NBU anticipates the following volumes of direct budget financing:
2026 – approximately $50 billion;
2027 – over $52 billion;
2028 – $44 billion.
Furthermore, the forecast accounts for defense-related funding under the “Ukraine Support Loan” framework—exceeding $32 billion in 2026 and reaching $37 billion in 2027. Thanks to this international support, the NBU expects that substantial international reserves will be maintained. At the end of 2026 and 2027, they will exceed $62 billion, and in 2028, they will amount to approximately $57 billion.
