It is likely that Ukraine will see real economic growth of around 3 per cent in 2024. This continues the trend of wartime recovery after Ukraine’s economy contracted by around 29 per cent in 2022, followed by real economic growth of 5 per cent in 2023. The IMF has forecast an average annual inflation rate of 5.8 per cent for 2024, down from a peak of around 20 per cent in 2022. Defense spending is expected to account for approximately 60 per cent of Ukraine’s state expenditures in 2025, the UK Defense Intelligence reports.
The russian economy will likely grow by around 3.6 per cent in 2024, a continuing trend of growth since the initial economic shock of the war in 2022. This growth is highly likely being driven by government spending, particularly on the military-industrial complex. However, economic growth is forecast to slow in 2025 due to pressures from inflation, labour shortages and sanctions.
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Russian defense spending is expected to increase further in 2025 to account for 32 per cent of total budget expenditures, while other areas of the budget such as social spending face cuts. Increased government spending will highly likely intensify existing inflationary pressures in the economy, with an annual average inflation rate of 7.9 per cent forecast for 2024.
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