War will last longer: KSE forecast revised
KSE analysts changed the baseline scenario, moving the predicted end of full-scale war from the end of 2026 to the second half of 2027. In their opinion, longer hostilities will mean significantly higher costs for defense and security, slowing down economic recovery, and delaying Ukraine's access to international financial markets.
Because of this, the state budget will continue to be under significant pressure, and the need for external support will remain critical.
The need for financing will increase to tens of billions of dollars
According to the forecast of KSE Institute, cont 2027–2029 years Ukraine will need more $67.4 billion in international financial aid, even taking into account the implementation of the program Ukraine Support Loan.
Analysts also expect the current account deficit excluding grants to be larger by $68.9 billion due to military spending and increased imports. Although the reclassification of the Ukraine Support Loan program by volume 90 billion euros formally improves budget indicators, the actual need for financing does not decrease.
If the deficit will be covered mainly by soft loans, the public debt of Ukraine together with loans under the program E.R.A can exceed 100% of GDP already in 2028, and its decrease in 2029 will be insignificant.
The economy will grow more slowly and inflation will remain high
According to economists, the prolongation of the war will negatively affect the rate of economic development of the country. Aggregate economic growth in 2026–2029 will be on 3.7 percentage points lowerthan previously predicted.
The average level of inflation during this period will be approx 1.6 percentage points higher, and at the end of 2026 and the beginning of 2027, it may exceed 10% due to disruption, supply problems and rising business costs.
In such conditions, according to KSE's forecast, the National Bank will be forced to pursue a tighter monetary policy. The base scenario provides for a temporary increase in the discount rate to 15.5% already in October 2026.
The hryvnia will be under devaluation pressure
Experts also predict a gradual weakening of the national currency. According to their estimates, the course can achieve UAH 46.3 per dollar at the end of 2026 and grow to UAH 49.9 per dollar until the end of 2028, after which a gradual strengthening of the hryvnia is possible.
At the same time, under the condition of timely receipt of international aid, Ukraine's international reserves can remain at a level of close to $70 billion until 2029. If the volume of external financing decreases, the NBU's ability to support the foreign exchange market will significantly decrease.
The reconstruction of the country will depend on international support
KSE emphasizes that without additional funding, Ukraine risks facing not only a lack of resources for reconstruction, but also difficulties in ensuring defense capability. Analysts also predict that the return of Ukrainians from abroad will be slower than previously expected.
In their opinion, the key role in the post-war recovery of the economy will be played by employee retraining programs, effective employment, stimulation of the return of citizens and further support of international partners, without which the implementation of large-scale reconstruction plans will be significantly complicated.
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