In 2024, real GDP grew by 2.9%. This is evidenced by the State Statistics Service. On the one hand, GDP growth slowed down compared to 2023 (from 5.5%). On the other hand, Ukraine's economy is recovering for the second year in a row in the context of a full-scale war and constant Russian attacks on production facilities and infrastructure. This is stated in the NBU commentary.
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“A slowdown in economic growth in 2024 was expected given the deteriorating security situation, resurgent power shortages and poor harvests,” the report said.
The regulator noted that the economy was supported by high domestic demand, soft fiscal policy, significant business adaptability, as well as the NBU’s efforts to ensure macro-financial stability.
The actual growth rate of real GDP turned out to be lower than the National Bank’s estimate published in the Inflation Report for January 2025 (3.4%).
This is, in particular, due to the recovery of the decline in GDP in the fourth quarter of 2024 (by 0.1 percentage points) due to a significant reduction in agricultural indicators (by 30.3% y/y).
Partial influence was also exerted by the increase in the comparison base as a result of the State Statistics Service's improvement of the economic growth indicator in the fourth quarter of 2023 as part of the traditional revision of the GDP indicator.
Economic recovery
Consumption further supported the economic recovery. Private consumption provided the largest positive contribution to real GDP growth in 2024. The increase in final household consumption expenditure accelerated to 6.8% and was supported by high rates of growth in real wages, according to the State Statistics Service.
Although fiscal policy remained soft last year, the role of the public sector in the economy gradually declined. Thus, by the end of 2024, final consumer spending of the public sector decreased by 4.5%.
Investment activity
Capital expenditures of the budget and improvement of financial results of enterprises supported investment activity. Last year, gross fixed capital formation increased by 3.5% y/y.
Private sector investments were directed primarily at the development of logistics capacities and autonomous energy supply in the context of restoring the electricity deficit, while public sector investments were directed at the restoration of infrastructure, as well as military purposes and the development of the defense industry.
Export
Exports returned to growth, and import volumes continued to increase. Physical export volumes in 2024 grew for the first time since 2019 — by 10.3% y/y, which was primarily supported by the stable operation of the sea corridor. At the same time, the revival of domestic demand was largely ensured by imports, the physical volumes of which increased by 7.7%.
As a result, the contribution of net exports to real GDP growth remained negative (-0.9 wt. pts), although it decreased compared to previous years.
Economic results were uneven across activities
Agriculture had the largest negative contribution to GDP growth in 2024. Gross value added (GVA) of this sector fell by 7.3% at the end of the year due to a lower harvest.
Hot weather and drought in the summer and early autumn had a negative impact on crop yields, especially for late crops. The decline in yields led to higher feed prices, which hindered the development of livestock farming.
The resurgence of the power deficit due to further damage to the Russian energy infrastructure in Ukraine also held back economic growth. Although the situation remained relatively stable thanks to repairs and electricity imports, the GVA of the energy sector fell by 2.7% over the year.
Energy shortages, increased shelling and lower volumes of agricultural raw materials for processing have held back the development of the processing industry. The growth of GVA in this sector has slowed to 6%.
Thanks to the increase in gas and metal ore production, growth in the mining industry resumed — GVA increased by 3.6%. In addition, the stable operation of the sea corridor had a significant impact, which also had a positive effect on the financial results of the metallurgy and transport industries.
Although the trade sector's GDP growth rate declined by 4.1% in 2024, consumer demand remained robust, as reflected by strong performance in the retail and services sectors.
The contribution of soft fiscal policy to GDP growth remained significant. High volumes of budget financing supported industries related to the production of defense products and also led to an increase in the GVA of budget sectors. The GVA of the public administration and defense sector in 2024 increased by 2.4%, education – by 10.8%, and healthcare – by 4.3%.
Capital budget expenditures on the construction of fortifications, repairs to critical infrastructure and other rehabilitation projects, together with investment contributions from the private sector, ensured high growth rates of GVA in construction (by 16.2%).
The stable operation of the financial system, including banks, contributed to the improvement of the financial sector's results. In 2024, the sector's GVA growth resumed after a two-year decline and was the highest among types of activity (27.4%). Despite a slowdown compared to 2023 due to difficulties in finding orders, the IT industry's GVA also grew at a high rate (by 8.3%).
Forecast
The NBU expects that Ukraine's economic growth will continue in 2025.
The trend will be supported by the expected increase in harvests, a reduction in the electricity deficit and a revival in external demand.
Economic growth will continue to be limited by the effects of the war, particularly labor shortages and damage to infrastructure and production facilities.
The National Bank will publish the main indicators of the updated forecast for 2025-2027 during a press briefing on monetary policy on April 17, 2025, and more detailed information in the Inflation Report on April 24, 2025, according to the schedule.
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- NBU GDP