According to Interfax-Ukraine, Ukraine’s economy showed the first signs of emerging from a recession in the first half of 2026, however, the high foreign trade deficit, inflationary pressures, and the dependence of public finances on international aid remain key macroeconomic risks, according to the latest issue of “Economic Monitoring.”
As noted by Maksym Urakin, Ph.D. in Economics and founder of the Experts Club information and analytical center, after real GDP fell by 0.6% year-over-year in the first quarter, the economy returned to growth in April–June.
In the second quarter, Ukraine’s real GDP increased by 0.4% compared with the same period last year and by 0.3% compared with the previous quarter. At the same time, the National Bank’s forecast projected growth of the Ukrainian economy at only 1.3% for the full year of 2026.
“Positive factors in the first half of the year included the resumption of at least minimal GDP growth, the return of international reserves to above $50 billion, stability in the foreign exchange market, more consistent international financing, and the adaptability of Ukrainian businesses. The main risks remain the war, the state of the energy sector, high production costs, a labor shortage, weak commodity exports, and a growing trade imbalance. Ukraine has a significant supply of external liquidity, but it cannot replace domestic economic growth,” Urakin noted.
Consumer inflation slowed to 7.2% in June, while core inflation accelerated to 8.1%. The NBU’s discount rate remained at 15%.
At the same time, after four months of decline, Ukraine’s international reserves increased by 12.1% in June—to $51.27 billion. The NBU’s foreign exchange interventions remained substantial.
Foreign trade remains one of the main structural risks to the Ukrainian economy. From January through June 2026, merchandise imports totaled approximately $49.3 billion, while exports amounted to about $21 billion. Thus, the merchandise trade deficit reached approximately $28.3 billion.
Public finances also remain under significant strain. Revenues to the General Fund of the state budget for the first half of the year totaled nearly 1.9 trillion UAH, while expenditures amounted to approximately 2.23 trillion UAH.
Approximately 1.4 trillion UAH, or about 63% of all General Fund expenditures, was allocated to the security and defense sector. The volume of international grants totaled 569.6 billion hryvnia.
According to Urakin, one of the main objectives of economic policy should be to transform significant imports of equipment, international funding, and defense spending into a foundation for creating new domestic production capacity.
“The next phase of economic policy should consist not only of maintaining financial stability, but also of transforming imported equipment, international funds, and defense spending into new production assets. The foundation for long-term development should be energy self-sufficiency, the defense-industrial complex, agricultural processing, machine building, production localization, logistics, digital technologies, and exports of high-value-added products,” says the founder of Experts Club.
At the same time, the first half of the year revealed significant differences between the world’s largest economies and emerging markets.
The Chinese economy grew by 4.7% in the first six months of 2026, while India posted a growth rate of about 7.8% in April–June.
Turkey continued to combine economic growth with extremely high inflation. In the second quarter, its GDP increased by 2.3% year-over-year and by 1.1% compared to the previous quarter, while annual inflation in June remained near 32%.
Brazil showed more moderate growth: its GDP in the second quarter increased by 2% year-over-year and by 0.5% compared to the previous quarter. In the first half of the year, the country’s economy grew by 1.9%, and annual inflation in June slowed to 4.64%.
“Key emerging economies ended the first half of the year with very different growth patterns. China grew by 4.7%, but its second quarter was weaker than the first, and domestic consumption lags significantly behind industrial output and exports. India continues to grow by nearly 8%, driven by the size of its domestic market and investment. Turkey remains an example of how inflation exceeding 30% limits the quality of economic growth, while Brazil is showing more moderate growth with gradual control of inflation. For Ukraine, the main conclusion remains the same: long-term growth requires its own industrial, technological, and export base,” Urakin emphasized.
In his assessment, the first half of the year confirmed the viability of Ukraine’s macrofinancial stabilization model, but at the same time revealed its limitations.
“The return of GDP to modest growth and the replenishment of reserves are positive signs; however, the $28.3 billion merchandise trade deficit, high underlying inflationary pressures, and the budget’s dependence on external financing reveal the limits of this model. Only by developing its own production and export base will Ukraine be able to transition from an economy of wartime stabilization to a model of sustainable postwar growth,” concluded Maksym Urakin.
“Economic Monitoring” is a monthly analytical and statistical publication led by Maksym Urakin, Ph.D. in Economics. The publication analyzes the main macroeconomic indicators of Ukraine and the world’s leading economies, as well as trends in GDP, inflation, public finances, international reserves, foreign trade, and key risks to economic development.
