NBU records anemic economic growth in Q1 2025
Ukraine’s real GDP grew 0.5% YoY in Q1 2025, the National Bank of Ukraine (NBU) reported on April 25.
The NBU noted that despite the ongoing war, economic growth will continue in 2025, thanks to higher crop yields, a reduced electricity deficit, faster-than-expected manufacturing recovery, and renewed domestic demand.
“A significant factor in the economy’s growth in the first quarter was the largely stable supply of electricity,” the central bank said.
“In the first quarter of 2025, the electricity deficit was lower than expected, thanks to warm weather and rapid repairs of [damaged] power plants and infrastructure. An important contribution also came from businesses adapting to power disruptions through the development of distributed generation, installing equipment for energy autonomy, and importing electricity, as survey results show.”
The bank also reported that its business activity expectations index rose to 108.2% from 101.8% in Q4 2024, suggesting that Ukraine’s private sector, as a whole, forecasts growing revenues.
High demand for arms production and fortification construction kept metallurgy and engineering facilities busy, while preparations for the spring sowing season boosted fertilizer output. Some livestock sectors also saw growth amid a revival in exports of various products.
However, a shortage of agricultural raw materials due to last year’s poor harvest has slowed down activity in the food industry and transportation, including export shipments. The destruction of natural gas extraction facilities in a series of Russian missile strikes led to lower gas output in Q1 and increased demand for imports. A shortage of workers (likely exacerbated by mobilization) also hampered economic growth, the bank said.
Overall, the NBU forecast modest GDP growth in 2025. The outlook is being constrained by wartime effects, including labor shortages, enemy attacks, and the destruction of gas infrastructure that will increase reliance on imports, as well as negative impacts from global trade tensions. These factors have lowered NBU’s forecast for real GDP growth in 2025 to 3.1% from 3.6%.
The IMF and World Bank project that Ukraine’s GDP will grow by 2% in 2025.
Ukraine’s GDP grew 2.9% in 2024, 5.5% in 2023, and fell 29.1% in 2022.
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