Inflation Has Turned, Yet Ukraine's Central Bank Upgrades Its 2026 GDP Forecast

Central Bank's Revised Macroeconomic Outlook

According to НБУ: Speaking at an event hosted by the Centre for Economic Strategy, National Bank of Ukraine (NBU) Deputy Governor Volodymyr Lepushynskyi unveiled an updated macroeconomic projection. The central bank now expects gross domestic product to expand by 1.8% in 2026, up from the 1.3% growth forecast issued in April. The overall drag linked to war-related effects is estimated at 0.9 percentage points, while the positive budgetary impulse - thanks largely to domestic production of weapons - adds 1.4 percentage points.

Outlook for the Coming Years

The NBU also anticipates international reserves climbing to almost $70 billion in 2026. Monitoring the situation, Lepushynskyi noted that the downward path of inflation reversed in July, and the central bank's decision that month to raise its key policy rate reflected stronger underlying price pressure and elevated inflation risks. He stressed that

“in circumstances of mounting fundamental inflationary pressure amid high uncertainty, the National Bank must act proactively, head off pro-inflationary risks, preserve the appeal of hryvnia savings - essential to keeping the currency market stable - and ultimately guide inflation back toward the 5% target.”

According to the NBU's estimates, the base balance will remain close to equilibrium, something also tied to localised arms production. Even so, the economic environment stays difficult. Among the key factors are the course of the war and the risk of fresh destruction, uneven inflows of foreign financing, additional budget needs, and the knock-on impact of the Middle East conflict on energy prices.

The revised macro forecast points to some positive movement in growth expectations despite the continuing war and its related challenges. Stronger GDP projections and larger international reserves could help lay the groundwork for economic stabilisation. Still, significant risks remain and could alter the landscape substantially. Therefore, the NBU's future policy steps will be crucial for sustaining stability and keeping inflation under control in a highly uncertain environment.