Ukraine’s Economy Could Grow 5% If Ceasefire is Reached, Says EBRD

Rebuilding Hopes Tied to Lasting Peace

Ukraine’s war-ravaged economy could expand by 5% in 2026 if a ceasefire is secured, according to the European Bank for Reconstruction and Development (EBRD). However, long-term reconstruction depends on sustained peace, the bank warned.

The EBRD, which has invested $6.2 billion (£4.9 billion) in Ukrainian projects since the war began, forecasts a GDP growth of 3.5% for the country this year despite ongoing Russian attacks on power infrastructure.

EBRD Ready to Support Ukraine’s Recovery

Beata Javorcik, the EBRD’s chief economist, emphasized the bank’s commitment to Ukraine’s post-war rebuilding efforts. “We stand ready to invest when the time comes,” she said, while also acknowledging the challenges of economic recovery in conflict-ridden nations.

Javorcik highlighted the resilience of Ukraine’s government in maintaining macroeconomic stability throughout the war, calling it a “great achievement.” However, she cited historical data showing that half of all war-torn economies continue to feel the effects even 25 years after the conflict ends.

US Talks with Moscow Raise Uncertainty

As former U.S. President Donald Trump engages in negotiations with Moscow to end the war, Kyiv has reportedly not been invited to participate. Speculation remains over whether the U.S. will push for concessions to Russia in exchange for peace.

Trump had previously suggested that Ukraine’s rich mineral reserves could be leveraged to repay U.S. support during the war. However, details of any potential resource agreements remain unclear.

Geopolitical Shifts and Economic Consequences

At the G20 finance ministers’ meeting in South Africa, UK Chancellor Rachel Reeves stressed the global economic impact of Russia’s invasion. “Higher energy and food prices, along with trade disruptions, have placed a heavy burden on the global economy,” she said, emphasizing the need for a “just and durable peace.”

The EBRD also revised its regional GDP growth forecast for 2025, lowering it to 3.2% from the previously estimated 3.5%. Javorcik attributed this to rising defence spending across Europe and the uncertainty surrounding Trump’s proposed tariffs.

Rising Defence Budgets and Economic Trade-Offs

Countries across Europe, including Poland, Greece, Armenia, and Tunisia, are increasing their defence budgets in response to rising geopolitical tensions. Javorcik warned that sustained military spending could hinder long-term economic growth by diverting funds from crucial areas like education, infrastructure, and research & development.

“If defence spending is a necessity and social spending remains politically untouchable, then infrastructure and innovation investments will be the first to suffer,” she cautioned.

Trump’s Tariffs Could Ripple Across Economies

While the EBRD predicts Trump’s potential tariffs may not directly impact many European economies, indirect effects could be significant. The bank estimates that a 1% contraction in Germany’s GDP due to tariffs could shrink economies in Eastern Europe by 0.8%. Countries like Turkey, Hungary, and Slovakia would likely face even greater losses.

As Ukraine’s future hinges on war negotiations, international financial institutions remain prepared to support its recovery—but only if a stable and lasting peace is achieved.