The Cabinet of Ministers reviewed the macroeconomic forecast, on the basis of which the draft state budget for 2027 is being prepared. The estimate of the growth of Ukraine's economy for 2026 has been reduced from 1.6% to 0.1% - that is, according to the results of the year, the GDP will actually remain almost at the level of last year, and will not grow significantly, as was expected back in the spring.
The forecast for 2027 was also worsened: instead of the previously planned 1.3%, the government now expects only 0.4% economic growth. At the same time, the inflation forecast was increased to 8.5% per annum, and the estimates of business profits and export volumes became worse than those laid down in previous calculations.
What is stagflation and why is it a warning sign
The combination of almost zero growth with high inflation is what economists call stagflation - a state in which prices continue to rise, and the economy cannot respond to this by expanding production. For businesses, this means the simultaneous pressure of rising costs and weak demand, and for households - slower growth of incomes compared to prices.
The revised forecast directly affects the calculations of the revenue part of the budget for 2027: worse expectations for company profits and export earnings mean less income to the treasury from income tax, VAT and customs payments. This leaves less room for maneuver and increases the budget's dependence on external financial support from Ukraine's partners.
For ordinary Ukrainians, the main conclusion is simple: the increased inflation forecast means that money is worth more in the future seek protection against impairment - through currency, deposits with a higher yield or other instruments, and not to leave savings "under the pillow" in cash hryvnia.
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