On Tuesday, March 4, a presentation took place regarding the results of the study on the topic "Ukraine's Economic Forecast for 2025," created by UIM experts.
The Ukrainian economy accounts for only 0.2% of the global economy, so it is heavily influenced by global trends. The presentation analyzed global trends, their impact on the Ukrainian economy, and the internal trends that we will have to deal with in 2025. UIM experts conducted a thorough analysis of global and domestic economic realities, presented possible scenarios for the development of Ukraine’s economy in the current year, and presented macroeconomic indicators for the most likely scenarios.
Global Economic Trends
- The trend towards protectionism and fragmentation in the world continues, as a result of the slowdown in economic growth, which leads to a reduction in the share of the "pie" that is available for annual distribution. This results in increased competition between countries and social groups. As the expert explained: “When you start closing off from your neighbor, your neighbor starts reflecting that and closes off from you.”
It is important for Ukraine to understand its place in this game and to form economically beneficial alliances. For the Ukrainian economy, there remains the risk of being left out of value-added chains within some regional clusters or blocks.
Inflation in key global economies is gradually returning to central banks’ target levels. For further rate cuts by the Fed, progress in slowing inflation is needed.
High budget deficits in the world create risks of increased taxes and the introduction of tariffs. For example, Trump, by introducing tariffs, is attempting to reduce the U.S. budget deficit, which exceeds 6% of GDP. What does this mean for Ukraine? While other countries focus on themselves, they will not be as concerned with us.
The global economy is growing modestly, and China is likely moving towards a "Japanese scenario." China is one of the world’s largest consumers of raw materials. Accordingly, a potential decline in demand in China will lower prices for raw materials, which will primarily affect the economies of countries that are exporters of raw assets, including Ukraine (iron ore, black metals, agricultural products), and their currencies.
Commodity markets are experiencing a slow stagnation in prices. “The external environment for Ukraine can be characterized as moderately negative,” summarized the speaker.
In light of recent news regarding Ukraine’s historic agreement with the U.S., Anatolii Amelin noted that this has not yet had a significant impact on Ukraine’s economy. The expert shared the main trends for Ukraine’s economy in 2025.
8 Trends of Ukraine's Economy
- Labor shortages push wages upward. The main reasons cited by the expert are the large migration of Ukrainians during the war and mobilization, which has led to wage increases in the labor market. "If the war continues, wages will rise even higher," added her colleague, Yana Lavryk.
Wage growth serves as an inflationary factor. Against the backdrop of inflation, the monetary policy of the NBU becomes stricter.
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Tax burden increases, making it more advantageous for businesses to operate "in the gray zone." The state’s share in the economy remains high. Anatolii Amelin emphasized that there are no formal reasons for an increase in the tax burden.
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The uneven flow of external assistance creates uncertainty. When external assistance is delayed, Ukraine’s Ministry of Finance takes advantage of the situation and raises taxes, which does not stimulate economic development.
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Election preparations intensify populism. According to a survey, people are preparing for elections.
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The prospects for improving business conditions are unlikely. One of the main factors limiting business activity is the lack of qualified workers. The current situation could be used to initiate modernization, as Japan and Korea did in the past, but for this, access to cheap capital and low energy costs are needed. However, these are not available in Ukraine.
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The competitiveness of Ukraine’s economy in external markets is decreasing. Our trade imbalance is at a historical maximum.
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The war contributes to the active development of military tech. Despite this, the defense industry’s development is held back, as we only operate on a one-year budget, without considering the long-term perspective.
Ukraine’s 2025 Development Forecast
In December 2024, UIM experts highlighted four likely scenarios for Ukraine’s development in 2025:
- “Inspiring Hope” (40% probability) — Ceasefire + full external assistance.
- “War for a Great Peace” (30% probability) — Continued active fighting + full assistance from partners.
- “Despair” (10% probability) — Continued active fighting + reduced assistance.
- “Terrifying Uncertainty” (20% probability) — Ceasefire + reduced assistance.
The most favorable scenario for Ukraine is "Inspiring Hope," and the least optimistic scenario is "Despair." For more details with figures and components of potential developments, you can download the expert presentation from the UIM website.
Yana Lavryk mentioned that Ukraine is currently afloat due to partner assistance, but we are already "being forced to mature." However, the expert believes that from a long-term perspective, this is a mature approach and a chance to achieve financial independence.
Anatolii Amelin noted that under these conditions, we must be prepared for reduced incomes. Yes, we will become somewhat poorer, but we will save lives and our country. However, the question remains: Are ordinary citizens of Ukraine ready for such developments? This question remains open.
