IMF predicts significant improvement in Ukraine's GDP in 2026-2027

This is according to the official IMF statement following the completion of the sixth review of the Extended Fund Facility for Ukraine, released on Friday, Ukrinform reports.

Thus, the table drawn by the Fund on Ukraine's economic indicators shows that the country's real GDP this year may reach 4% with a decrease to 2.5-3.5% next year.

“Economic growth in 2024 has been upgraded given better than expected resilience to the energy shocks. However, a slowdown is expected in 2025 due to an increasingly tight labor market, the impact of Russian attacks on Ukrainian energy infrastructure, and continued uncertainty about the war,” the IMF explained.

It noted that inflation in Ukraine has been rising recently, mainly due to food prices, while inflation expectations remain “well anchored”.

The IMF assesses that the government has managed to sustain adequate reserves by continued sizeable external support. Overall, the outlook remains subject to “exceptionally high uncertainty”.

Nevertheless, the IMF expects Ukraine’s GDP growth to increase significantly in 2026-2027 – to 5.3% and 4.5%, respectively, but the basis for such calculations has not been detailed.

At the same time, the Fund positively assessed the recent tightening of monetary policy and National Bank’s readiness to take further steps in case inflation expectations deteriorate.

“Allowing exchange rate flexibility will help strengthen the resilience of the economy to external shocks while safeguarding reserves,” the IMF believes.

Apparently, due to this, the Fund stopped short of indicating the average hryvnia to dollar exchange rate based on the results of the current and following years in the table of outlook indicators. It is only noted that in 2023 the average exchange rate stood at UAH 38 per 1 US dollar.

“The financial sector remains stable, but vigilance is needed given heightened risks. Progress on strengthening bank resolution and risk-based supervision, stress-testing frameworks and contingency planning should be sustained,” the IMF emphasized.

The Fund once again emphasized the need to sustain the reform momentum in anticorruption and governance. In particular, the authorities "need to advance the creation of a new court for high public disputes, and amend the criminal procedure code."

As Ukrinform reported, on Friday the IMF Executive Board approved another $1.1 billion tranche for Ukraine, which will be used to support the budget.