Monthly and quarterly statistical data published after the end of the reporting period were used for indicators. Maksym Urakin, director of development and marketing of Interfax-Ukraine, candidate of economic sciences, and founder of the Experts Club information and analytical center, presented an overview of current macroeconomic trends that determined the situation in Ukraine and the world in May-June 2026.
Macroeconomic indicators of Ukraine
As of the end of May, the Ukrainian economy maintained macro-financial control, but the balance of risks remained unfavorable Compared to April, headline consumer inflation slowed somewhat, but underlying price pressures intensified and fuel prices continued to rise sharply. International reserves declined for the fourth month in a row, the trade deficit widened to $23 billion, and the budget continued to operate under an extremely high defense burden. At the same time, the NBU maintained control over the foreign exchange market, and international financing supported the implementation of the state's civil expenditures.
According to the preliminary estimate of the State Statistics Service, published after the end of the reporting period, the real GDP of Ukraine in the 1st quarter of 2026 decreased by 0.6% compared to the 1st quarter of 2025. Compared to the previous quarter, taking into account the seasonal factor, the decline was 0.7%. Nominal GDP was equal to UAH 2,047.2 billion. The negative dynamics reflected the consequences of electricity shortages, destruction of energy and logistics infrastructure, weak investment activity, unstable external financing and unfavorable conditions at the beginning of the year. At the same time, domestic consumption, trade, certain types of processing industry and the service sector partially restrained a deeper decline.
In the April macroeconomic forecast, the National Bank lowered the estimate of real GDP growth of Ukraine in 2026 to 1.3%. The regulator expected that economic activity will be supported by consumer demand, budget expenditures, investments in the restoration of energy and logistics, as well as the development of the defense-industrial complex. At the same time, the NBU forecast did not foresee a quick transition to a sustainable recovery due to security risks, damage to production facilities, a shortage of workers and limited export opportunities.
"The May data confirmed that the Ukrainian economy is not yet in the phase of full-fledged recovery, but in the mode of complex stabilization. A 0.6% drop in GDP in the first quarter and a forecast for growth of just 1.3% for the year means that even a small new shock could nullify expected growth. Sustainable recovery requires not only demand, but also physical expansion of energy, industrial and logistics capacities," Urakin said.
The inflation situation in May remained ambiguous. According to the NBU and the State Statistics Service, consumer inflation slowed to 8.2% in annual terms, compared to 8.6% in April. Prices have increased by 0.9% over the month, and by 5.8% since the beginning of the year. At the same time, core inflation accelerated to 7.9% y/y against 7.6% in April. Processed food products rose in price by 10.4%, services - by 13.6%, administratively regulated prices - by 10.2%, and fuel - by 38.7% y/y.
The slowdown in the overall indicator was primarily explained by weaker growth in prices for raw food products. Meat, eggs, and some vegetables and fruits rose in price more slowly, although the price of cereals continued to rise. At the same time, fundamental inflationary pressure was exacerbated by high business costs for energy, fuel and logistics, wage growth due to a shortage of workers, the transfer of the previous weakening of the hryvnia to prices, as well as the increase in the price of services. A return to sustained decline was expected in 2027, when inflation was expected to slow down to 6.5%, and to the target level of 5% in 2028.
As of the end of May, the discount rate remained at the level of 15% per annum. The last decision at that time was adopted by the board of the National Bank on April 30. The NBU explained the maintenance of the rate by the need to maintain the attractiveness of hryvnia assets, the controllability of inflationary expectations and the stability of the foreign exchange market. The basic forecast provided for maintaining the rate at the level of 15% at least until the II quarter of 2027, and in case of further strengthening of price pressure, the regulator allowed the application of additional measures.
"The decrease in general inflation from 8.6% to 8.2% did not mean that the price problem was solved. Core inflation, on the contrary, rose to 7.9%, services became more expensive by more than 13%, and fuel - by almost 39%. With such an inflation structure, the 15% rate remains a necessary safeguard for hryvnia savings and currency stability. Premature easing of policy could quickly return inflation to a double-digit level," Maksym Urakin emphasized.
The foreign exchange sector remained under control, but needed significant support from the regulator. As of June 1, 2026, Ukraine's international reserves amounted to $45.727 billion, having decreased by 5.2% over May. This was the fourth consecutive monthly decline in reserves.
In May, the NBU sold $3.135 billion on the foreign exchange market, which is 12.4% less than in April. The government's foreign currency accounts received $599.2 million, of which $498.8 million came from the World Bank, and $100.4 million came from the placement of currency government bonds. $126.2 million was allocated to service and repayment of the state debt in foreign currency, Ukraine paid another $274.9 million to the IMF. The reduction in reserves was partially offset by the positive revaluation of financial instruments and other operations for $441.9 million. Despite the decrease, reserves provided financing for 4.7 months of future imports.
"Four months of consecutive reduction in reserves is no longer a one-time fluctuation, but a trend that requires careful monitoring. The $45.7 billion level is still significant and provides sufficient external liquidity, but the foreign exchange market remains structurally deficient. The further stability of the hryvnia will depend on the rhythm of international inflows, the reduction of import energy dependence and the expansion of export revenue," Urakin believes.
According to the State Customs Service, Ukraine's trade turnover in January-May 2026 amounted to $58 billion. Imports reached $40.5 billion, and exports - $17.5 billion. Thus, the commodity deficit for five months amounted to about $23 billion, and imports exceeded exports by 2.3 times.
Ukraine imported the most goods from China - $11.1 billion, Poland - $3.9 billion, and Turkey - $2.7 billion. The main destinations of Ukrainian exports were Poland - $2 billion, Turkey - $1.5 billion, and Italy - $1.1 billion.
In the structure of imports, machinery, equipment and transport accounted for $17 billion, fuel and energy products - $6.4 billion, chemical industry products - $5.7 billion. Together, these categories made up 72% of all imports. The basis of exports was food products for $10.6 billion, metals and their products for $1.7 billion, as well as machinery, equipment and transport for $1.5 billion.
"The expansion of the commodity deficit to $23 billion in five months is one of the most serious signals for the balance of payments. A large part of imports is related to defense, energy and reconstruction and is therefore objectively necessary. The problem is that exports are not growing at the appropriate pace and remain overly dependent on agricultural raw materials. Ukraine needs to transform equipment imports into new production opportunities, otherwise the trade gap will continue to be financed by foreign aid and reserves," Maksym Urakin emphasized.
The budget situation remained tense, but controlled. In January-May, the general fund of the state budget received UAH 1.36 trillion. Cash expenditures of the general fund amounted to UAH 1.8 trillion, which is 16.9% more than in the same period of 2025. Directly in May, the revenues of the general fund were equal to 318.7 billion UAH, and expenses - 449.3 billion UAH.
Expenditure on security and defense in five months reached UAH 1.14 trillion, or 63.4% of all expenditures of the general fund. In May, UAH 287.1 billion was allocated to these needs. UAH 702.1 billion was spent on wages for employees of the budget sphere with accruals, on subsidies and transfers to enterprises - UAH 305.3 billion, on social security - UAH 296.5 billion, on goods and services - UAH 205.9 billion, on servicing the state debt - UAH 143.8 billion, on transfers to local budgets - UAH 104.3 billion.
International grants for January-May amounted to UAH 249.9 billion, in particular UAH 21.7 billion was received in May. In total, the general and special funds of the state budget received UAH 1.8 trillion in five months, and cash expenditures of the state budget amounted to UAH 2.25 trillion. Borrowings to the general fund amounted to UAH 260.6 billion, and UAH 229 billion were allocated to the repayment of the state debt. When 63.4% of general fund spending goes to defense and security, the state has very limited room for capital investment and long-term development. That is why external financing should remain rhythmic, and every hryvnia of internal resources should be used for defense capability, energy sustainability and production recovery," Urakin noted.
Global Economy
The world economy remained relatively stable as of the end of May 2026, but the inflationary and geopolitical background continued to deteriorate. High oil and gas prices following the escalation of the conflict in the Middle East have pushed up manufacturing and transportation costs, and major central banks have refrained from further easing monetary policy.
In its April World Economic Outlook, the International Monetary Fund forecast global economic growth of 3.1% in 2026 and 3.2% in 2027, assuming the limited duration and geography of the Middle East conflict. The IMF warned that a longer war, a new energy shock, deepening geopolitical fragmentation, trade disputes and high public debt could significantly worsen the outlook.
The US economy maintained positive dynamics. According to the BEA's third estimate, real GDP in the first quarter of 2026 increased by a 2.1% annualized rate compared to the previous quarter. In the usual quarterly measure, the growth was about 0.5%.
A positive contribution was provided by investments, exports, government and consumer spending.
At the same time, inflation in the US continued to accelerate. According to the BLS, the CPI rose 4.2% year over year in May after 3.8% in April. Over the month, prices rose by 0.5%. Core inflation was 2.9%, energy sources rose in price by 23.5% y/y, and gasoline by 40.5%. Only in May, energy carriers increased in price by 3.9%, and gasoline - by 7%.
The Federal Reserve System did not hold rate meetings in May. Therefore, as of the end of the month, the range of the federal funds rate remained at the level of 3.5-3.75% set on April 29. The Fed pointed to high inflation, rising global energy prices and high uncertainty surrounding events in the Middle East.
The Eurozone showed much weaker economic dynamics. According to the Eurostat estimate, available in May, the GDP of the eurozone in the 1st quarter increased by only 0.1% compared to the previous quarter and by 0.8% in annual terms. This indicated the actual stagnation of the region's economy and its high sensitivity to energy and foreign trade risks.
Annual inflation in the Eurozone accelerated to 3.2% in May against 3.0% in April. In the European Union, it rose to 3.3%. According to Eurostat's estimate, energy carriers in the eurozone rose in price by 10.8% y/y, services - by 3.5%, food, alcohol and tobacco - by 1.9%, non-energy industrial goods - by 0.9%. Core inflation excluding energy, food, alcohol and tobacco was 2.6%.
The European Central Bank also did not hold a rate meeting in May. As of the end of the month, the deposit rate remained at the level of 2.0%, the rate of main refinancing operations – 2.15%, and the marginal lending rate – 2.40%. During the meeting on April 30, the ECB stressed that the risks of higher inflation and deterioration of economic growth have increased due to the energy shock.
In Great Britain, annual inflation remained at the level of 2.8% in May, unchanged from April. Over the month, prices increased by 0.2%. At the same time, ONS data indicated an acceleration of core inflation to 2.6% and services inflation to 3.7%. Transport services and goods rose in price by 6.8% y/y, and motor fuel by 24.6%.
The Bank of England did not change policy parameters in May, so the base rate remained at 3.75%. At the April 30 meeting, eight members of the Monetary Policy Committee supported keeping the rate unchanged, while one advocated raising it to 4%.
“May confirmed that the cycle of rapid interest rate cuts in leading economies has effectively stopped. Inflation in the US rose to 4.2%, in the Eurozone to 3.2%, and Great Britain faced a new acceleration in the prices of services and fuel. For Ukraine, this means more expensive global capital, more cautious behavior of investors, and additional imported price pressure due to energy carriers," Urakin noted.
The Chinese economy grew by 5.0% year-on-year in the first quarter of 2026. Nominal GDP reached 33.419 trillion yuan. In May, the consumer price index increased by 1.2% y/y, but decreased by 0.1% for the month; average inflation for January-May was 1.0%. Industrial production grew by 4.5% y/y, particularly high-tech production by 15.1%.
At the same time, domestic demand remained weak. Retail sales in May decreased by 0.6% y/y, although they increased by 1.4% in January-May. According to the NBS, fixed capital investment decreased by 4.1% in the five months, while foreign trade in goods increased by 15.3%. This confirmed the persistence of an imbalance between strong production and exports and restrained domestic consumption.
India maintained the highest growth rates among major economies. After the transition to the new base year 2022/23, the official preliminary estimate of real GDP growth in the 2025/26 fiscal year was 7.7%, and nominal GDP growth was 8.9%. In the IV quarter of the fiscal year, real GDP grew by 7.8% y/y. The main drivers remained the service sector, domestic consumption, construction and public investment.
Turkey again faced increased inflation in May. According to TurkStat, consumer prices rose by 1.71% for the month and by 32.61% year-on-year. Since the beginning of the year, inflation was 16.61%. The annual indicator slightly exceeded April's 32.37%, which testified to the instability of the disinflation process. At the same time, in the 1st quarter of 2026, Turkish GDP grew by 2.5% y/y and only 0.1% compared to the previous quarter, which indicated a loss of economic momentum.
Brazil showed more balanced dynamics. In the first quarter of 2026, GDP grew by 1.1% compared to the previous quarter and by 1.8% year-on-year, to 3.3 trillion reais in current prices. In May, the IPCA index increased by 0.58% for the month, and annual inflation reached 4.72%, compared to 4.39% in April. Since the beginning of the year, prices have increased by 3.20%.
"China, India, Turkey and Brazil continue to demonstrate different development models. China maintains a strong pace thanks to industry, technology production and exports, but has weak domestic demand. India relies on services, investment and the scale of its domestic market. Turkey maintains growth, but its quality is reduced by inflation of more than 32%. Brazil is growing more slowly, but is trying to maintain a balance between business activity and price stability. For Ukraine, the main conclusion is unchanged: long-term growth is impossible without its own production, technological and export base," Urakin believes.
Conclusions
As of the end of April 2026, Ukraine maintained macro-financial manageability, but the main indicators indicated increased risks. Real GDP in the 1st quarter decreased by 0.6% y/y, inflation accelerated to 8.6% in April, core inflation to 7.6%, and the discount rate remained at 15%.
International reserves decreased to $48.2 billion, or 7.3% for the month. The commodity deficit for January-April reached $18.3 billion. Revenues of the general fund of the state budget amounted to UAH 1.04 trillion, while expenditures amounted to UAH 1.35 trillion. UAH 854.1 billion, or 63.3% of all expenditures of the general fund, were directed to security and defense.
"Positive factors remained a significant amount of reserves, a controlled currency policy, international financing, stable consumer demand, adaptability of business and the development of defense production. The main risks were the continuation of the war, the destruction of the energy infrastructure, the increase in fuel prices, the shortage of workers, the weakness of exports and the dependence of the budget on foreign aid," the founder of the Experts Club emphasized.
The world economy has also entered a more difficult period. The IMF forecast global growth of 3.1% in 2026, but warned of a preponderance of downside risks. Inflation accelerated to 3.8% in the US and 3.0% in the Eurozone, while central banks in the US, Eurozone and Great Britain kept interest rates unchanged. China grew by 5% in the first quarter, India maintained a pace of more than 7%, while Turkey once again faced inflation of more than 32%.
"May 2026 showed that Ukraine's stabilization model remains viable, but its financial margin of safety is shrinking. The simultaneous acceleration of inflation, reduction of reserves and widening of the trade deficit is a signal that foreign aid cannot be the only basis of economic stability. Ukraine needs to move from financing current survival to creating a new production model. Its basis should be energy autonomy, the defense-industrial complex, agro-processing, mechanical engineering, logistics, digital technologies, and the export of products with high added value. Only such a transition is capable of turning macro-financial stability from a temporary safety cushion into a foundation for long-term development," concluded Maksym Urakin.
The article presents the key macroeconomic indicators of Ukraine and the world economy as of the end of May 2026. The analysis was prepared on the basis of data from the State Statistics Service of Ukraine, the National Bank of Ukraine, the Ministry of Finance, the State Customs Service, the International Monetary Fund, Eurostat, BEA, BLS, NBS, ONS, TurkStat, IBGE and other official institutions.
The monthly analytical and statistical product "Economic Monitoring" is fully available to clients Interfax-Ukraine.
Economic Monitoring project manager Maksym Urakin
