According to the NBU’s forecast, inflation will be 7.5% at the end of 2026 and approach the 5% target going forward, with the target to be reached in mid-2028. The economy will grow by 1.8% this year, and the economic recovery will accelerate to 3%–4% in the years ahead.
The baseline scenario of the NBU’s forecast assumes that economic conditions will gradually normalize. It takes into account the current impact of air attacks and destruction, as well as the sufficiency of external financing over the forecast horizon.
The detailed analysis and macroeconomic forecast can be found in the quarterly Inflation Report for January 2026.
Inflation will decline to 7.5% in 2026 and will reach the 5% target going forward
Inflation will continue to decline in the coming months, primarily due to the remaining effects of higher harvests in 2025. At the same time, the consequences of massive damage in the energy sector will put pressure on prices through both market and administrative mechanisms. Against a low base, this will cause a moderate acceleration of inflation in H2 2026. As a result, as of the year-end, inflation will decline moderately, to 7.5%.
In the next years, inflation will return to a steady downward trajectory thanks to the normalization of labor market conditions, lower imported inflation, gradual increases in harvests, and the NBU’s monetary policy measures. The recovery of the energy sector will also contribute to disinflation, although businesses’ large expenses on energy independence will continue to put pressure on prices for some time. The NBU forecasts inflation to slow to 6% in 2027 and to reach the central bank’s target of 5% in 2028.
The NBU will maintain appropriate monetary conditions to lower inflation further and to attain the 5% inflation target over the policy horizon. At the same time, interest rate policy will gradually be eased, supporting lending and economic growth.
Economic recovery will remain muted in 2026, but will accelerate in the coming years
Higher harvests, as well as investments in infrastructure reconstruction and the defense industry, will support further economic growth. However, given the massive air attacks on Ukraine’s energy system, the NBU has worsened its assumptions regarding the electricity deficit (in particular, from 3% to 6% for this year) and, accordingly, revised its forecast for real GDP growth in 2026 downward, from 2.0% to 1.8%.
The recovery is expected to accelerate in the future. Fiscal stimuli will gradually decrease, but a number of other factors will contribute to the revival of economic activity: a gradual improvement in the energy sector, increased private investment, European integration reforms, and a reversal of migration processes. According to the NBU’s forecast, real GDP will grow by 2.8% in 2027 and by 3.7% in 2028.
Labor market conditions will gradually improve, in particular thanks to the reversal of negative migration trends in the years to come
The NBU assumes that due to the difficult security situation, the net outflow of population in 2026 will be about 0.2 million people. It is assumed that the net return of migrants will begin in 2027 (about 0.1 million people), and in 2028 this process will intensify (0.5 million people) – in particular given the expected decline in security risks and the overall improvement in the economic situation.
At the same time, the labor market will need a large number of workers amid the country’s reconstruction and investment growth. High demand for labor will contribute to a further decrease in unemployment and will support real wage growth. According to the NBU’s forecast, real wages will grow by 7% in 2026 (at the same rate as in 2025) and by 6% per year in 2027–2028.
International assistance will be sufficient to ward off monetary financing of the budget deficit
The NBU left its assumption regarding the budget deficit in 2026 unchanged at around 19% of GDP, which is in line with the law on the state budget. Afterward, the indicator is expected to decline: to 14% of GDP in 2027 and to 9% of GDP in 2028 as security risks subside.
International assistance will continue to play an important role in financing the budget deficit in the coming years. The NBU assumes that international partners will disburse to Ukraine USD 51.4 billion in 2026, USD 42.7 billion in 2027, and USD 21.6 billion in 2028. This will allow the country to maintain its international reserves at a sufficient level to support the FX market sustainability: at USD 65 billion at the end of 2026, at around USD 73 billion in 2027, and at nearly USD 71 billion in 2028.
In addition to the updated macroeconomic outlook, the January Inflation Report features a number of special topics:
- Factors That Caused Inflation to Deviate from Target in 2025
- State Budget Parameters in 2026
- Small Monetary Independence of CEE Countries
- Optimism about AI: Growth Driver or Economic Risk?