Ukraine may face a significant financing deficit and a drop in GDP if the war continues until 2026.
The International Monetary Fund presented two possible scenarios for the development of the Ukrainian economy, which depend on the duration of the war.
This is discussed in the published analysis of the IMF.
The baseline scenario assumes that the war will continue until mid-2025. Under this scenario:
- GDP will grow by 2.5-3.5% in 2025.
- Average inflation will be 10.3% (1.3 points higher than previously expected).
- International reserves will reach $43.3 billion.
The IMF notes that the economic consequences of the winter energy deficit may be less severe due to business investment in generation, electricity imports from Europe and infrastructure repairs.
The negative scenario assumes that the war will drag on until mid-2026. This means:
- GDP will contract by 2.5% in 2025.
- Inflation will rise to 11%.
- International reserves will amount to $41.1 billion.
Under this scenario, Ukraine will face a longer and stronger economic downturn, and the external financing deficit will reach $177.2 billion (versus $148 billion under the baseline scenario).
The IMF notes that the risks to both forecasts remain extremely high due to the uncertainty of the war, international support, and the progress of reforms.
Recall that earlier the International Monetary Fund updated the memorandum on economic and financial policies as part of the fifth review of the credit program.