EBRD cuts Ukraine growth forecast as war damage strains exports and infrastructure

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EBRD cuts Ukraine growth forecast

Highlights

EBRD cuts Ukraine's real GDP growth forecast for 2026 to 1.5% from 2.2% and for 2027 to 2.5%, citing war-related risks.
Renewed Russian attacks on Black Sea ports are expected to reduce Ukraine's grain and oilseed exports by 50% to 60% in H2 2026, straining agricultural companies' liquidity.
Inflation accelerated to 7.7% in July, with wheat prices up over a third since February 2026 to about $7.50 per bushel, raising global food price risks.

Revised outlook and export disruption

As reported by EBRD in its Regional Economic Prospects published today, the bank lowers its forecast for Ukraine’s real GDP growth in 2026 to 1.5% from 2.2% projected in June 2026. It also cuts its 2027 growth forecast to 2.5%, down by 1.5 percentage points, saying the outlook depends heavily on how the war evolves and whether external financial support remains available.

Economic activity stays under pressure even as Ukraine maintains macroeconomic stability in the fifth year of Russia’s war of aggression. Real GDP growth is broadly flat in the first half of 2026, as defence production, public spending and resilient services help support output but fail to offset damage to energy infrastructure, labour shortages, weak confidence and renewed logistics bottlenecks.

Renewed Russian attacks on Black Sea ports, shipping and civilian transport infrastructure are significantly disrupting export capacity. Ukraine relies on those ports to ship grain, iron, steel and other commodities, while alternative routes via the Danube and the EU-Ukraine Solidarity Lanes offer lower capacity and face added constraints from low water levels and attacks on rail infrastructure.

Inflation risks and wider regional effects

The bank says grain and oilseed exports are expected to fall by 50% to 60% in the second half of 2026 because of the renewed port blockade. That is likely to leave unsold inventories and increase storage, liquidity and working-capital pressure for agricultural companies, adding another drag on exports and broader economic activity.

Inflation is also accelerating, reaching 7.7% in July, driven by higher fuel and energy costs linked to the conflict in the Middle East, exchange-rate pass-through and wider labour-market pressures. A prolonged export disruption could push food prices higher beyond Ukraine, with wheat prices up by more than a third since February 2026 to about U.S. $7.50 per bushel and expected to remain elevated through 2028, a trend that tends to feed more strongly into headline inflation in lower-income economies.

The EBRD, Ukraine’s largest institutional investor, says it has made 10.8 billion euros available to the country since the full-scale invasion began in February 2022. The funding supports energy security, vital infrastructure, food security, trade and private sector activity.

In our earlier article on Nordic central banks’ response to inflation, we noted that Norway raised interest rates while Sweden signaled possible tightening as higher fuel prices tied to the Middle East conflict threatened progress toward 2% inflation targets. We also highlighted how investors were demanding the highest yields in two decades for long-dated government bonds, reflecting broader expectations that major central banks could keep policy restrictive for longer as inflation risks persist.

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