The Vienna Institute for International Economic Studies (WIIW) has updated its forecast for Ukraine, noting a slowdown in economic growth amid the ongoing aggression from the Russian Federation, inflationary pressure, and unfavorable conditions for the agricultural sector.
This is reported by Business • Media
GDP Growth Slowing
According to WIIW’s estimates, in the first quarter of 2025, the annual growth rate of Ukraine’s gross domestic product fell to 1%, while the corresponding figure for the previous year was 2.9%. For the entire year of 2025, the institute forecasts GDP growth of 2.5% – half a percentage point lower than previously anticipated in the spring forecast. Despite the positive impact from consumer demand and active industrial production, primarily in the defense industry, these factors are unable to fully offset the economic losses caused by the armed aggression of the Russian Federation.
Challenges for the Macroeconomy and Agricultural Sector
At the same time, the inflation rate in Ukraine continues to rise: between April and May, it reached about 16%. This has forced the National Bank of Ukraine to maintain the key interest rate at a high level of 15.5%, which, as experts note, hinders economic recovery.
“This has compelled the central bank to keep the key interest rate at a high level of 15.5%, which certainly slows down growth,” say specialists.
The economic situation is also affected by the expected low harvest due to drought and the temporary restrictions on duty-free access for Ukrainian agricultural products to the European Union markets.
Ukraine’s economic stability largely depends on Western financial and military support. WIIW experts warn that in the event of political changes in the United States and a possible cessation of aid, as well as a lack of compensation from European partners, the consequences for the Ukrainian economy could be catastrophic.