Ukraine Recession: War Costs Hit GDP

The National Bank of Ukraine announced on Wednesday that the country’s economy will shrink by 0.4 percent in 2026. This projection marks a sharp reversal from the bank’s earlier estimate of 1.8 percent growth for the same period.

Governor Andrii Pyshnyi attributed the downgrade to intensified Russian attacks on commercial infrastructure and the ongoing blockade of maritime export routes. He noted that these factors caused a 0.5 percent drop in gross domestic product during the third quarter of 2026.

Pyshnyi stated that the blockade and strikes on production facilities and logistics networks drove the downward trend. He identified metallurgical and ore-mining companies as the hardest hit sectors, while performance in trade and agriculture also declined.

The central bank calculated that intensified attacks on businesses alone reduced the annual GDP by 1.9 percentage points. Pyshnei explained that recovery will be slow in 2027 and 2028 due to the scale of the damage.

He said future growth will rely on public and private investment in the defense industry, domestic weapons production funded by the Ukraine Support Loan, and projects to restore critical infrastructure.

Recent data from the Ministry of Economy shows steel production fell by 80 percent in September. Russian strikes damaged seven blast furnaces, including five at Metinvest facilities and two at ArcelorMittal sites.