Dragon Capital downgrades Ukraine's economic growth forecast to 1% in 2026 due to Russian attacks

Dragon Capital has lowered its forecast for Ukraine's GDP growth from 2% to 1.7% in 2025 and from 1.5% to 1% in 2026 due to renewed Russian attacks on the energy sector and a change in the EU's position on the use of frozen Russian assets. About said dragon Capital's press service.

"Due to significant uncertainty about the extent of potential damage to critical infrastructure, the risks of further deterioration in the outlook remain high," Dragon Capital said.

According to the company's analysts, Ukraine's real GDP growth slowed to 0.8% year-on-year in the first half of 2025 from 2.9% in 2024 and 5.5% in 2023.

At the same time, Dragon Capital reiterated its previous estimate of 5% year-on-year GDP growth in 2026 if a sustainable ceasefire is reached early next year.

Ukraine's annual consumer inflation rate has been slowing in recent months, falling to 11.9% yoy in September from 15.9% in May.

The company's analysts expect that underlying inflationary pressures will increase in the coming months due to another rise in business costs for energy supply and increased budget spending, but will ease again in 2026.

According to the updated forecast, consumer inflation will decline from 9.3% this year to 6% by the end of 2026.

Dragon Capital also expects that by the end of the year, the NBU will allow the hryvnia to weaken slightly against the US dollar amid seasonal growth in demand for foreign currency, but will refrain from significant devaluation.

The hryvnia exchange rate is forecast to reach 43 UAH/$ by the end of 2025 and 44 UAH/$ by the end of 2026, compared to 43.5 UAH/$ and 46 UAH/$ expected earlier.

• October 23, the National Bank of Ukraine downgraded the economic growth forecast in 2025 to 1.9% due to problems in the energy sector and labor shortages.