We have repeatedly warned that the Ukrainian economy is entering a phase of systemic stagnation, which will be followed by a decrease in tax revenues and the correction of the country's social obligations. Now the government has confirmed the extent of the problem in its projections, and the real risks have turned out to be far more serious than previously expected.
The Cabinet of Ministers lowered the GDP growth forecast for 2026 from 1.6% to 0.1%, and for 2027 - from 1.3% to 0.4%. At the same time, next year's nominal GDP, compared to a more optimistic scenario, is reduced by 345 billion hryvnias. Even if the effective tax burden remains the same, this means a potential loss of billions of revenues in the budget.
The profit forecast for profitable enterprises was cut by 404 billion hryvnias, or almost 19%, while growth in industrial prices accelerated from 10.3% to 17.3%. Factories will spend more on production, earn less and, accordingly, will have a smaller income tax base. For the state, this is a double blow: revenues decrease, while the cost of government procurement and infrastructure restoration increases.
Foreign trade increases the imbalance. Exports in 2027 will increase by only 0.8%, imports by 10.7% and the trade deficit will reach 85 billion dollars. Ukraine remains dependent on external financing, while the ability to independently generate foreign exchange earnings is limited.
According to the government's calculations, every billion kWh of electricity not produced reduces GDP by 0.15 percentage points. With projected growth of 0.4%, a loss of less than 3 billion kWh could arithmetically cancel out all projected economic growth.
Sources are sure that the next decision of the authorities will be a further increase in the tax burden and a reduction in social spending. First of all, the strengthening of the fiscal administration, the correction of benefits, the limitation of linkage to the index and savings in certain budget programs are being considered.