IMF worsens forecast for Ukraine: war could last until mid-2026

The International Monetary Fund (IMF) has released an updated forecast for Ukraine, taking into account the likelihood of the war continuing until mid-2026. The document notes that the baseline scenario assumed the end of the war by the end of 2025, but now analysts point to further deterioration of the economic situation.

The main indicators of the updated forecast are:

• An increase in the external financing deficit: from $148bn to $177.2bn.
• Expected decline in real GDP by 2.5 per cent in 2025.

IMF experts pay special attention to the destruction of Ukraine's energy infrastructure, which may significantly complicate electricity supplies. As a result, economic recovery will slow down and inflation will remain high.

Support from international partners

Despite the difficult outlook, the IMF notes the stability of its support programme for Ukraine. Discussions with the Ukrainian government and international partners confirm the credibility of the financial guarantees, which allows for an expectation of macroeconomic stability even in a difficult environment.

In the medium term, the IMF forecasts a gradual recovery due to:

• european integration processes;
• return migration;
• recovery of economic activity.

Growing budget deficit

The updated forecast takes into account increased defence spending and economic weakness, which will lead to a significant increase in the budget deficit in 2025-2026. The pace of economic recovery will be slower than optimistic estimates and inflation will be at moderate levels.

The IMF continues to work with Ukraine to support its economy in the face of a prolonged war.