Government expects GDP to grow by 2.7% next year

The relevant resolution of the Cabinet of Ministers, No.751 of July 28, 2024, was published on the Government portal, Ukrinform reports.

“As expected, gross domestic product will continue to recover in 2024. However, this process may be complicated by security risks and challenges, in particular, the risks of continued shelling of energy and transport infrastructure, continued destruction of production facilities, complicated logistics, and continued restrictive measures by neighboring countries on the import or transit of Ukrainian agricultural goods.

Accordingly, GDP is projected to grow by 2.7% in 2025, 7.5% in 2026, and 6.2% in 2027.

The authors of the declaration add that the largest contribution to growth will come from investment demand, which will be driven by the high need for investment in rebuilding destroyed infrastructure and building up Ukraine's own defense capabilities.

To a significant extent, this demand will be driven by the budget, which will finance capital expenditures for reconstruction and business support programs.

"Additionally, household demand will play a significant role, given its largest share in gross domestic product and ongoing wage growth trends in the context of a significant structural imbalance in the labor market," the document says.

In particular, the unemployment rate in Ukraine is expected to decline to 16.0% by 2027, (17.7% next year, and 17.4% in 2026).

The declaration projects the minimum wage for 2025-2027 at UAH 8,000.

As reported, the NBU forecasts that economic growth will decelerate to 3% in 2024, largely due to the loss of energy infrastructure and the projected electricity shortage (approximately 5%, according to the NBU). In 2025 and 2026, GDP growth is expected to accelerate as economic conditions normalize, reaching 5.3% and 4.5%, respectively.