The International Monetary Fund believes that Russia's war of aggression against Ukraine will end by the end of 2025 — a positive scenario. The negative scenario predicts its completion in mid-2026.
Points of attention
- The IMF notes that the economic consequences of winter electricity shortages may be weaker than previously expected.
- The forecast for real GDP growth remains at 2.5-3.5% in 2025.
The IMF made its own forecast
The Fund team presented an updated baseline scenario for Ukraine within the framework of the IMF's Extended Fund Facility.
The document states that the war will likely end by the end of 2025.
In addition, it is noted that real GDP growth during the current year reached 4% in annual terms, which is 1 percentage point more than in the fifth review.
However, the economic impact of winter electricity shortages may be weaker than previously expected, due to business investments in their own generation capacity, increased potential for imports from Europe, and efforts to repair and install additional generation capacity and distribution networks.
What else does the IMF predict?
It is worth noting that inflation at the end of the year was revised up by 1 percentage point to 10%.
This was primarily due to further pressure from accelerating raw food price increases, which also affected staple food commodities.
In addition, depreciation of previous periods, growth in wages and energy prices played a role in this process.
The forecast for real GDP growth remains unchanged at 2.5-3.5% in 2025. This is due to the higher potential from the acceleration of energy capacity repairs in 2024 and the introduction of new capacity in 2025, which, however, will be offset by the effects of a tighter labor market, which will contribute to higher income and consumption growth against the backdrop of easing price pressures.
The document also states that average inflation has been revised upward by 1.3 percentage points compared to the previous IMF report to 10.3%.
