Ukraine GDP Growth Rebounds in Q2, Below Official Projections

Economics Research 4 August 2026 | 2:56PM BST

Ukraine: GDP Growth Rebounds in Q2, Below Official Projections

Bottom Line: GDP Growth in Ukraine improved from -0.6%yoy to +0.6%yoy in Q2, in Andrew Matheny | line with our forecast but 0.2pp below the NBU’s projection for +0.8%yoy. While we Goldman Sachs International do not have a breakdown of the expenditure or production components driving the Johan Allen increase, the NBU noted improvements in the energy system and higher government | spending as drivers of the expansion, alongside reduced uncertainty regarding Goldman Sachs International

external assistance. We maintain our forecast for a gradual economic recovery in H2 and into 2027, although we see downside risks to our below-consensus growth outlook given disruptions to Black Sea shipping as well as the recent escalation of Russian military attacks on Ukraine.

Key Numbers for Q2 (flash estimates):

Real GDP YoY: +0.6%yoy (GS: +0.6%, NBU: +0.8%yoy), from -0.6%yoy in Q1.

Real GDP sa QoQ: +0.4%qoq, from -0.7%qoq in Q1

1. GDP growth improved materially in Q2, from -0.6%yoy (revised from -0.5% previously) to +0.6%yoy, in line with our forecast but below the NBU’s +0.8%yoy projection. It came in slightly below EcoMin’s estimate for Apr-May GDP (+0.9%yoy and +0.8%yoy). In sequential, seasonally adjusted terms, real GDP growth increased from -0.7%qoq to +0.4%qoq, although we would caution against reading too much into the sequential numbers given historical issues with seasonal adjustment, as well as large shocks and structural breaks in the series. 2. As today’s release is a flash release, we do not have a breakdown of the expenditure or production components driving the increase, but the NBU noted improvements in the energy system and higher government spending as drivers of the expansion, alongside reduced uncertainty regarding external assistance. Previous prints have also generally seen a trend of rising household consumption. 3. Forecasts for Ukrainian growth are sensitive to assumptions about the likely duration of the Russo-Ukrainian war and the credibility and durability of a potential peace deal. We do not take a view on the course of the war or if/how it may be resolved but have laid out two scenarios for Ukraine’s economy: 1) a baseline, involving a de facto resolution to the war over time, entailing a 5-6% peace dividend in year one and 3% trend growth thereafter; and 2) an upside growth scenario, with a rapid and credible de jure resolution to the war that implies an 8-10% peace dividend and 5% trend growth rate. Nevertheless, as time passes, risks become tilted towards a later resolution to the war and

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consequently a weaker post-war growth outlook, implying less return migration and a smaller peace dividend. 4. Despite the return to positive growth in Q2, our macroeconomic outlook continues to be cautious. We expect growth to slow from +1.8% in 2025 to +0.5% in 2026 (NBU: +1.8%yoy), before slowly recovering to +3.0% by the end of the decade. In the near term, a tight labour market and the recent escalation of Russian attacks against Ukrainian civilian and energy infrastructure imply downside risks to the growth outlook. Beyond the weak growth outlook, our expectations for further currency depreciation imply a more adverse fiscal outlook than suggested by baseline IMF projections. 5. The recent re-escalation of the conflict, paired with the intensified targeting of commercial vessels in the Black Sea – which halted maritime traffic in the midst of harvest season – adds downside risk to growth prospects in H2 2026.

Andrew Matheny, Johan Allen, and Alberto Dario Zanettin*

*Alberto is an intern in the CEEMEA economics team.