Ukraine's economy has returned to weak growth, but the trade deficit has reached $28.3 billion — Experts Club

As Interfax-Ukraine reports, Ukraine's economy showed the first signs of emerging from decline in the first half of 2026, but the high foreign-trade deficit, inflationary pressure and the dependence of public finances on international aid remain the key macroeconomic risks, according to the latest issue of the “Economic Monitoring”.

As the founder of the information and analytical centre Experts Club, Candidate of Economic Sciences Maksym Urakin, notes, after real GDP fell 0.6% year on year in the first quarter, the economy returned to growth in April–June. In the second quarter Ukraine's real GDP rose 0.4% compared with the same period last year and 0.3% compared with the previous quarter. Meanwhile the National Bank's forecast envisaged growth of the Ukrainian economy of only 1.3% for the whole of 2026.

“The positive factors of the first half were the return of at least minimal GDP growth, international reserves back above $50 billion, a controlled currency market, more regular international financing and the adaptability of Ukrainian business. The main risks remain the war, the state of the energy sector, high production costs, labour shortages, weak goods exports and a growing trade imbalance. Ukraine has a considerable cushion of external liquidity, but it cannot replace domestic economic growth,” Urakin noted.

Consumer inflation slowed to 7.2% in June, while core inflation accelerated to 8.1%. The NBU key rate remained at 15%. At the same time, Ukraine's international reserves, after four months of decline, rose 12.1% in June to $51.27 billion. The NBU's currency interventions remained significant.

One of the main structural risks of the Ukrainian economy remains foreign trade. In January–June 2026 goods imports were about $49.3 billion, while exports were roughly $21 billion. The goods deficit thus reached about $28.3 billion.

A significant burden remains on public finances too. Revenues of the general fund of the state budget for the first half were almost UAH 1.9 trillion, expenditures about UAH 2.23 trillion. About UAH 1.4 trillion, or roughly 63% of all general-fund spending, went to the security and defence sector. The volume of international grants was UAH 569.6 billion.

In Urakin's view, one of the main tasks of economic policy should be to turn the large imports of equipment, international financing and defence spending into a basis for creating new production capacity inside the country.

“The next stage of economic policy must consist not only of maintaining financial stability but of turning imported equipment, international funds and defence spending into new production assets. The basis of long-term development should be energy autonomy, the defence-industrial complex, agro-processing, mechanical engineering, localisation of production, logistics, digital technology and the export of high-value-added products,” says the founder of Experts Club.

At the same time, the first half showed significant differences between the world's largest economies and emerging markets. China's economy grew 4.7% in the first six months of 2026, while India showed growth of about 7.8% in April–June. Turkey continued to combine economic growth with extremely high inflation. In the second quarter its GDP rose 2.3% year on year and 1.1% compared with the previous quarter, while annual inflation in June remained near 32%. Brazil showed more moderate dynamics: its GDP in the second quarter rose 2% year on year and 0.5% compared with the previous quarter. Over the first half the country's economy grew 1.9%, and annual inflation slowed to 4.64% in June.

“The key emerging economies finished the first half with very different growth structures. China grew 4.7%, but its second quarter was weaker than the first and domestic consumption lags considerably behind industry and exports. India continues to grow by almost 8%, relying on the scale of its domestic market and investment. Turkey remains an example of how inflation above 30% limits the quality of economic growth, while Brazil shows more moderate dynamics with gradual control of inflation. For Ukraine the main conclusion is unchanged: long-term growth requires its own industrial, technological and export base,” Urakin stressed.

In his assessment, the first half confirmed the viability of the Ukrainian model of macro-financial stabilisation but at the same time demonstrated its limits.

“The return of GDP to weak growth and the recovery of reserves are positive signals, but the $28.3 billion goods trade deficit, high core inflationary pressure and the budget's dependence on external financing show the limits of this model. Only the development of its own production and export base will allow Ukraine to move from an economy of wartime stabilisation to a model of sustainable post-war growth,” Maksym Urakin summed up.

The “Economic Monitoring” is a monthly analytical and statistical product whose project head is Candidate of Economic Sciences Maksym Urakin. The monitoring analyses the main macroeconomic indicators of Ukraine and the world's leading economies, the dynamics of GDP, inflation, public finances, international reserves and foreign trade, and the key risks of economic development.

Original source: open4business.com.ua