In Q2 2025, real GDP grew by 0.7% year-on-year (yoy), and by 0.2% quarter-on-quarter in seasonally adjusted terms. At the same time, in annual terms, economic growth slowed compared to Q1 2025 (0.9% yoy). This is according to detailed GDP data from the State Statistics Service of Ukraine (SSSU).
The main factors holding back economic growth remain the consequences of the full-scale war: the loss of people, territories, production facilities, and infrastructure. A significant contribution to the slowdown in recovery in Q2 was also made by weaker performance of the agricultural sector.
The actual rate of real GDP growth came out lower than the NBU estimated in its January 2025 Inflation Report (1.1%), which was primarily due to the more significant impact of unfavorable weather conditions on the timing of crop ripening, which was partially postponed to subsequent quarters.
Economic recovery was bolstered by sustained consumer demand
Private consumption provided the largest positive contribution to real GDP growth in Q2 2025 (5.5 pp). Households’ final consumption expenditures increased at a faster pace, by 9.0% yoy (versus 1.6% yoy in Q1).
Although fiscal policy remained accommodative and supportive of the economy, budgetary stimuli declined. Consumption of the general government sector decreased by 0.5% yoy. As a result, growth in the general government’s gross value added (GVA) slowed to 1.3% yoy, down from 10.3% yoy in Q1. At the same time, the growth of GVA accelerated in other budget sectors: to 6.1% yoy in education (up from 5% yoy in Q1) and to 8.9% yoy in healthcare (up from 6.8% yoy in Q1).
Investment activity declined
Gross fixed capital formation decreased by 2.5% yoy in Q2, following an increase by 37.7% yoy in Q1. Fiscal policy stimuli were also weaker than in Q1: capital expenditure growth slowed to 16.6% yoy (down from 66.3% yoy in Q1).
The negative contribution of net exports to GDP growth shrank
The annual decline in physical volumes of exports of goods and services slowed to 15.7% yoy (down from 17.8% yoy in Q1) thanks to increased supplies to the EU ahead of the introduction of the new terms of trade, sustained external demand, and a revival of activity in the metals industry. The growth rate of imports of goods and services decreased to 4.5% yoy (down from 8.7% yoy in Q1) against the backdrop of limited demand from farmers for fertilizers, plant protection products, and petroleum products due to adverse weather conditions that slowed the start of the harvest. As a result, the negative contribution of net exports to GDP growth dropped to 7.3 pp (down from 10.2 pp in Q1).
Economic performance was uneven by sector
The output of crop farming decreased in volume significantly due to the slow start of the harvest. Production in animal farming also continued to decline. Overall, the GVA of agriculture decreased by 23.4% yoy (in by 4.3% yoy in Q1), and the contribution of the sector to GDP growth was negative, at 0.5 pp.
At the same time, the stable situation in the energy sector in Q2 and last year’s low base, when important energy facilities were damaged due to russia’s attacks, resulted in growth in the energy sector. The sector’s GVA increased by 5.1% yoy after a decrease of 6.1% yoy in Q1.
This supported activity in other sectors of the economy: the construction sector’s GVA grew by 12.5% yoy, after a 10.2% yoy decline in Q1, and the GVA of manufacturing rose by 2% yoy (declined by 1.5% yoy in Q1). However, amid a decrease in natural gas production due to russia’s constant attacks on gas infrastructure, performance indicators of the mining industry continued to decline – by 10.4% yoy (15.1% yoy in Q1).
Cargo transportation picked up amid improved exports – the decline in the transportation sector’s GVA slowed to 6.4% yoy (down from 10.5% yoy in Q1). The GVA of trade grew by 4.7% yoy (3.3% yoy in Q1). In the hotel and restaurant business, the GVA rose by 8.8% yoy (8.9% yoy in Q1) thanks to sustained consumer demand. At the same time, the decline in financial sector’s GVA deepened to 21.7% yoy, compared to 15.8% yoy in Q1, due to the high base of the previous year.
The economy will continue to recover in H2
This will be facilitated by the intensification of harvesting, sustained domestic demand, and stronger fiscal stimuli on the back of increased budget expenditures. At the same time, the deterioration of the security situation and increased air attacks on infrastructure in recent months will restrain economic growth.
These and other factors will be taken into account in the updated forecast for 2025–2027, which the NBU will publish during the monetary policy press briefing on 23 October 2025. More detailed data will be released on 30 October 2025 in the Inflation Report, as per the approved and announced schedule.