Updated IMF Outlook for Ukraine's Economic Programme Maintains Pessimistic Projections, Leaves Door Open for Further Decline
The International Monetary Fund (IMF) has presented a series of economic projections for Ukraine, with a focus on the potential impact of the ongoing conflict in the country. In its eighth review of Ukraine's Extended Fund Facility (EFF), the IMF has outlined both a baseline scenario and alternative downside scenarios.
Under the **baseline scenario**, the war in Ukraine is expected to end by late 2025, with Ukraine's GDP growth reaching 2–3% in 2025 and accelerating to about 4.5% in 2026, assuming peace is achieved and reconstruction can proceed effectively.
However, the IMF also presents **alternative downside scenarios** tied to the war's duration and outcome. A prolonged conflict or lack of peace with insufficient security guarantees and financial resources could have adverse economic and social consequences, hindering the return of refugees, slowing reconstruction efforts, and delaying foreign direct investment—all crucial for economic recovery.
In a negative scenario assuming the war extends into mid-2026, the IMF forecasts a 1% decline in real GDP in 2025 instead of growth, zero growth in 2026, and increased financing needs by approximately $12.4 billion due to the extended conflict's economic pressures.
The IMF warns that Ukraine is “running out of space” to cope with further economic stress, implying that additional shocks—like escalation or prolonged fighting—could severely strain fiscal and debt sustainability, especially without decisive reforms and sustained international financial support.
Inflation is expected to decline to about 9% by the end of 2025 under the baseline, but prolonged conflict and economic instability could disrupt this trend.
The timing of the economic shock was shifted to the third quarter of 2025 during the eighth review. For the next year, Ukraine's real GDP is projected to remain flat, 0.5 percentage points lower than earlier projections.
In positive news, Ukraine recently received its ninth tranche of approximately US$500 million from the IMF under the four-year Extended Fund Facility programme. Additionally, Latvia is set to supply Ukraine with 42 Patria 6x6 armoured vehicles.
Looking ahead, the IMF projects Ukraine's real GDP to grow by 3.8% in 2027, unchanged from prior estimates. The duration and outcome of the ongoing conflict heavily influence Ukraine's economic trajectory: timely peace would enable moderate recovery and growth, while extended warfare or unstable peace conditions could result in stagnation or contraction, compounded by increased fiscal pressures and structural vulnerabilities.
[1] International Monetary Fund (IMF), Ukraine: Request for the Fourth Review Under the Extended Arrangement Under the Extended Fund Facility, 23 March 2023,
- The ongoing conflict in Ukraine could have far-reaching consequences for the country's economic health, with technology and finance sectors potentially experiencing delays in foreign investments due to the political instability and uncertainty.
- In its economic projections, the International Monetary Fund (IMF) highlights the critical role of business reforms and the general news environment in Ukraine, as decisive reforms and sustained international financial support are crucial for the country's economic recovery and fiscal sustainability.
- As the resolution of the ongoing conflict in Ukraine remains uncertain, general news outlets will likely focus on the impact of the war on various sectors of the national economy, including healthcare, which may encounter challenges in rebuilding and providing essential services to refugees and the general population.
