Ukraine’s real gross domestic product (GDP) will grow by 2.1% in the third quarter, 4.2% in the fourth quarter, and 5.2% in the first quarter of next year, according to an updated quarterly forecast published by the National Bank in its April “Inflation Report” on its website.
“The easing of fiscal policy and a significant economic boost resulting from the allocation of part of external financing to the localization of arms production, as well as larger harvests than last year, crops will contribute to a revival of economic activity in the second half of the year,” noted the NBU, which overall revised its economic growth forecast for this year upward to 1.8% from 1.3% in its April “Inflation Report.”
At that time, the National Bank expected GDP to grow by 1.9% in the third quarter of this year, by 1.7% in the fourth quarter, and by 4.7% in the first quarter of next year.
The NBU now expects the consolidated budget deficit (excluding grants in revenue) to rise to 35.2% of GDP by the end of 2026, compared with 24.7% of GDP last year, whereas as recently as April it had forecast a decrease in this figure to 19.2% of GDP.
According to the report, in the second quarter of this year, budget expenditures rose by 32.7% compared to the second quarter of last year—an increase of 0.45 trillion UAH, to 1.81 trillion UAH—while in the first quarter, they remained at last year’s level of 1.25 trillion UAH.
The National Bank emphasized that the fiscal stimulus offsets the negative impact of shelling, which the National Bank estimates at 0.9 percentage points.
According to a preliminary estimate by the State Statistics Service, following a 0.6% decline in the first quarter of this year, GDP increased by 0.6% in the second quarter of 2026, whereas the National Bank had expected growth of 1.7% in its April forecast.
The NBU explained that more substantial economic growth is being hampered by the consequences of Russia’s intensified attacks on logistics infrastructure—particularly the blockage of ports—as well as on the energy sector and business facilities. The decline also deepened significantly in the construction sector (to 7.5% in the second quarter) against the backdrop of a high base of comparison from last year, a shortage of skilled workers, and shifts in the structure of demand amid war and energy shocks: activity shifted away from large residential projects toward private housing and infrastructure restoration.
The National Bank also confirmed its growth forecast for 2027 at 2.8%, but revised its expectations for quarterly growth: while in April it had projected a 2.5% increase in GDP for the second quarter of next year, 2.0% in the third quarter, and 2.5% in the fourth, these figures now stand at 4.3%, 2.4%, and 0.2%, respectively.
The NBU attributes the acceleration of the recovery in the coming years to increased investment in the expansion of production capacity—particularly in the defense industry—further increases in crop yields, gradual stabilization in the energy sector, and sustained consumer demand.
“Accommodative fiscal policy will lead to a positive GDP gap in 2026–2027,” the Inflation Report also notes.
The forecast for the consolidated budget deficit for next year has been raised from 17.7% of GDP to 25.6% of GDP, and for 2028—from 10.9% of GDP to 14.6% of GDP.
According to the report, the downward revision of the GDP growth forecast for 2028 from 3.7% to 3.0% is due to more substantial fiscal consolidation.
As previously reported, according to the State Statistics Service, Ukraine’s GDP growth slowed to 1.8% in 2025 from 2.9% in 2024 and 5.5% in 2023, following a 28.8% decline in 2022—the first year of full-scale Russian aggression.
