On 23 April 2025, the NBU held an online meeting with the leadership of Ukrainian businesses that participate in the central bank’s business outlook surveys. These regular meetings are a good opportunity for the business community to learn about the NBU’s latest decisions and upcoming plans, provide feedback to the regulator, and get answers to pressing questions.
“We are sincerely grateful to businesses for their willingness to cooperate. Our surveys are not just statistics. They reflect the economy’s pulse and are one of the tools helping Ukraine survive, adapt, and plan for the future. The surveys keep us up to date on companies’ expectations, plans, responses to changes in public policy, existing constraints, and business risks. Staying in touch with companies makes it possible to better forecast macroeconomic developments and make reasonable decisions that reduce uncertainty for economic agents even amid a protracted full-scale war and elevated turbulence in the global financial markets,” Yuriy Polovniov, Director of the NBU Statistics and Reporting Department, said in his welcoming speech to the meeting’s participants.
The event gathered 102 representatives of 100 companies from all sectors of the economy and from the vast majority of Ukraine’s oblasts. As usual, the meeting covered a wide range of issues, including an overview of the economy’s current standing, the NBU’s updated macroeconomic forecast, exchange rate policy, and progress of FX liberalization.
Overview of the economic situation and macroeconomic forecast
As expected, inflation in Ukraine was rising throughout Q1 2025 (to 14.6% yoy in March). This uptrend was driven by the residual effects of last year’s lower harvests, further increases in prices for excisable goods, and the impact of fundamental factors, in particular higher energy and labor costs incurred by businesses, as well as robust consumer demand.
At the same time, inflation is gradually running out of momentum and will begin to decline in summer. Specifically, the anticipated increase in harvests will help drive down food inflation, and fundamental inflationary pressures will gradually subside as the power supply situation improves, pressure from the labor market moderates, and the NBU takes monetary policy measures. As a result, inflation is expected to slow into the single digits at the end of 2025 and reach the target of 5% in 2026.
Economic recovery will continue, although it remains restrained by the consequences of the war and global trade standoffs. Ukraine’s economy is expected to grow 3.1% in 2025. In particular, growth will be driven by stronger harvests and lower power shortages. Along with significant defense orders, this will support the industry. In 2026 and 2027, the growth in real GDP will pick up to 3.7%–3.9%, primarily thanks to increased investment in reconstruction, recovered production, and robust consumer demand.
Business expectations improved during Q1: the Business Activity Expectations Index (BAEI) moved into positive territory in March for the first time in 11 months. The positive impact on enterprises’ expectations was partially driven by robust consumer demand, increased production, a largely stable energy situation, and seasonal factors.
While having a limited effect on Ukraine, the intensification of global trade warfare will create certain additional opportunities. On the one hand, it will restrain the economies of some of Ukraine’s major trading partners, such as the EU and China. On the other hand, weaker demand amid trade tensions will put downward pressure on global energy prices, an outcome that is positive for Ukraine.
Comprehensive coverage of the macroeconomic forecast is available in the April 2025 Inflation Report.
Monetary Policy
In April, the National Bank of Ukraine left the key policy rate unchanged, at 15.5%. This decision will help maintain the sustainability of the FX market, keep inflation expectations in check, and ensure there is a gradual slowdown of inflation towards the target.
The NBU’s forecast envisages keeping the key policy rate at 15.5% over the coming months and returning to a cycle of interest rate policy easing after the peak of the price surge has passed and the risk of inflation staying in double digits has been reduced.
Considering the high level of uncertainty, which has only increased over past months, the NBU will respond flexibly to changes in the balance of risks to the price dynamics and inflation expectations. If the relevant risks increase, the NBU may maintain the key policy rate at the current level for longer than is envisaged by the forecast, and will also be prepared to take additional measures to combat inflation and bring it to the target of 5% over the policy horizon.
Easing FX Restrictions
FX liberalization has significantly improved the business environment in Ukraine, as repeatedly confirmed by representatives of Ukrainian companies and business associations. For example, since the introduction of the largest package of FX liberalization measures in May 2024, 337 companies have taken the opportunity to pay interest on “old” external loans, and 579 companies have used the option to repatriate “new” dividends.
At the same time, the FX liberalization measures have not had a decisive impact on the FX market. The share of cross-border transfers related to these liberalization measures remains at 4%-7% of the total volume of transfers, and almost half of these funds are the companies’ own foreign currency.
Thanks to FX liberalization, economic activity has increased, and conditions have been created for attracting investment: since May 2024, Ukraine has received USD 200 million in new equity investments, and Ukrainian companies have raised USD 600 million in external loans from non-residents.
The issue of easing FX restrictions remains a focus for the NBU. The central bank plans to combine the continued FX liberalization with the creation of incentives for the inflow of new capital into the Ukrainian economy as part of a stimulating liberalization concept. The approaches to this concept are currently being developed.
The NBU maintains a prudent approach to easing FX restrictions to avoid risks to macroeconomic and financial stability. Further steps will be determined by economic preconditions and the balance of risks.
The NBU will continue to move along the FX Liberalization Roadmap in accordance with its defined stages and when the appropriate preconditions are in place. Certain urgent needs of businesses that were raised during the meeting will also be taken into account.
Prospects of Transitioning to the Euro as the Anchor Currency
The US dollar is currently the anchor currency. The NBU sets the official US dollar exchange rate based on trading in the interbank foreign exchange market. The hryvnia exchange rate against other currencies is determined based on how the US dollar exchange rate has changed against those currencies.
U.S.-dollar-denominated transactions dominate in all FX market segments. Although the share of euro transactions is increasing in most segments, the increase is only marginal.
Given Ukraine’s European integration path, the increasing role of the European Union in ensuring the country's defense capabilities, increased volatility in global markets, and the likelihood of fragmentation in international trade, the NBU has begun to study and develop possible approaches to forming the preconditions for a future transition to the euro as the main anchor currency. This is a complex undertaking that requires thorough and multifaceted preparation.
During the meeting, NBU representatives – experts from the Statistics and Reporting Department, Monetary Policy and Economic Analysis Department, Financial Stability Department, and Open Markets, Department for Supervision of Non-bank Financial Service Providers and Financial Monitoring Department – provided detailed answers to numerous questions from representatives of the business community.
As usual, the NBU invites business representatives to participate in online surveys in the Monthly Business Outlook Surveys mobile application. This can be downloaded from Google Play and Apple Store. The NBU will continue to hold regular meetings with the managers of companies that participate in business outlook surveys.