Since March 2022, the Centre for Economic Strategy (CES) has been preparing monthly reviews of Ukraine’s economy during a full-scale war. The special topic of the July review is: «What is happening with the Ukrainian budget? Deficit, partner assistance, budget declaration».
All previous reviews can be found under the link.
Key changes in the Ukrainian economy in July:
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Monetary, FX, and banking sectors: Inflation falls to 14.3%, key policy rate remains steady at 15.5%. The return of inflation to the decline in the summer was expected, due to last year’s high base for comparing administratively regulated prices. Reserves up, Hryvnia stable to Dollar but weaker to Euro.
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Sectoral analysis: GDP increased by 0.9% in Q1 2025 — Ukraine’s economy is idling, with no engine of growth to move I forward. Monthly electricity exports exceed imports for the first time since 2022, with the surplus driven by good weather and lack of large-scale Russian energy attacks. Ukraine secured better DCFTA terms on June 30. Meanwhile, grain exports have dropped to their lowest level since 2022.
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Foreign trade: Ukrainian exports are weaker than last year with lower agricultural exports of grains and oilseeds, while imports driven by defence, energy, and fertilizers are stronger than last year. Export volumes are falling, but favourable prices soften the blow: price increases partly offset the sharp decline in export volumes.
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Fiscal sector: Changes to budget for 2025 bring +UAH 412 bn war expenditures, that will be covered by domestic borrowings and overperformance of revenues. In 5m of 2025, revenues are already higher than in 5m of 2024, and defence aid is still being provided. Total expenditures on war are 43% higher than last year, along with increase in debt service. The first half of 2025 has seen increasing financing needs, despite a projected full-year trajectory of gradual deficit-to-GDP reduction. As grant support declines, importance of fiscal planning decreases.
See our report below for further details.
Invited speakers:
- Orea bilanChief Economist at Dragon Capital.
- Gavin Gray, IMF Mission Chief for Ukraine.
- Roksolana pidlasaThe Chairperson of the Committee on Budget at The Verkhovna Rada of Ukraine.
- Olga ZykovaDeputy Minister of Finance of Ukraine.
Moderator: Hlib VyshlinskyExecutive Director of the Centre for Economic Strategy.
