KSE Institute in its macroeconomic review for the fourth quarter of 2026 forecasts a deterioration of the economic situation in Ukraine due to intensified Russian attacks on critical infrastructure and production capacity.
Real GDP forecast for 2026–2029
KSE revised its real GDP forecast: it now expects a contraction of 0.3% in 2026 instead of the previously projected growth of 1.9%. The 2027 estimate was also revised down — a decline of 0.6% instead of growth of 2.1%.
For 2028 the new forecast assumes growth of 4.4% versus 4.5% in the previous estimate, and for 2029 — 5% versus 5.6%. The baseline assumption about the end of the full-scale war was left unchanged — in the second half of 2027.
State budget financing gap and tax losses
KSE increased its estimate of the financing gap in the state budget for 2026−2029 to $99.5 billion from $67.4 billion in the previous forecast. In the baseline scenario, covering this gap is assumed to involve additional external borrowing, the raising of which has not yet been agreed.
Analysts estimate that the destruction of production capacity and export infrastructure will reduce tax revenues in 2026−2029 by $18.4 billion compared with the previous forecast.
Exports, inflation, unemployment, exchange rate and the National Bank of Ukraine (NBU) policy rate
Due to the blocking of the “Greater Odesa” ports and the halt in steel production, KSE expects Ukraine’s real exports to decline by 7.4% in 2026 versus 0.8% in the July forecast. Average annual inflation in 2026 is forecast at 9.1% versus 8.9% previously, and in 2027 — 13% versus 10.5%.
The unemployment rate in 2026 was left at 10.0%; in 2027 it is forecast at 10.3% instead of 9.5%, in 2028 — 11.5% versus 11.1%, and in 2029 — 8.9% versus 8.7%.
KSE expects the average annual exchange rate of the hryvnia to the dollar to be 44.5 UAH per $1 in 2026 (previously 44.8 UAH per $1), for 2027 — 47.8 UAH per $1 (previously 47.2 UAH per $1), and for 2028−2029 revised to 50.6 UAH per $1 and 51 UAH per $1 respectively. The average policy rate of the National Bank of Ukraine (NBU) is forecast at 15.5% in 2026 and 16.8% in 2027, with a rise to 17% by the end of 2026 and the start of reductions at the end of 2027.
