NBU includes unfavorable scenario in banks' stress tests with decline in Ukraine's GDP by 3.1%, hryvnia by 11.9% in 2025

MOSCOW. May 12 (Interfax) - The National Bank of Ukraine (NBU) has approved macroeconomic scenarios for stress testing of banks, with the baseline scenario envisaging a 3.1% GDP growth this year with the lower hryvnia to dollar exchange rate by 5.6%, while the unfavorable scenario envisions a 3.1% GDP decline and 11.9% hryvnia devaluation, Ukrainian media reported.

"The unfavorable scenario assumes quite a severe and prolonged crisis, which is realistic, but not catastrophic, and sufficient to assess the risks and opportunities to ensure the stability of banks without the introduction of regulatory temporary easing," the NBU said.

The NBU public forecasts are used for the baseline scenario, and the exchange rate value is 42.7 UAH/$1 at the end of this year and 45.5 UAH/$1 at the end of next year, the Focus Economics consensus forecast indicated.

Under the National Bank's unfavorable macroeconomic scenario, Ukraine's real GDP could fall by another 2.2% next year, while in 2027 it is expected to bounce back to growth at 3.3%.

"The decline in Ukraine's GDP under the unfavorable scenario in the first two years of the forecast horizon in the range of 25-75 persentile values of similar European countries, in the third year, growth is expected, taking into account the depth of the slump in the Ukrainian economy during the crisis before," the NBU said.

Presumably, the hryvnia may fall another 9.1% against the dollar in 2026 and 6.4% in 2027, which is equal to the exchange rate of 47.7 UAH/$1 at the end of 2025, 52.4 UAH/$1 in 2026, and 55.1 UAH/$1 at the end of 2027.

The National Bank also projects the inflation rate at 17.9% this year, 12.5% next year and 6% in 2027 in the unfavorable scenario, and the key policy rate (average for the period) at 15.8%, 14.7% and 14.2%, respectively.

The NBU announced in November 2024 that it would return to a full-fledged three-stage assessment of the banking system's resilience in 2025 for the first time during the crisis: Asset Quality Review (AQR) mandatory for all banks with the assistance of independent auditors, NBU's extrapolation of the results of in-depth asset verification under AQR for banks for whose assets an in-depth verification was conducted, and stress testing of the largest banks under baseline and unfavorable scenarios based on the financial statements of financial institutions with a three-year forecasting horizon.