New growth picture
Ukraine's central bank on Thursday recast its outlook and now sees the economy slipping 0.4% in 2026, a flip from its earlier 1.8% expansion forecast for that year. That would be the first annual drop since 2022, when output contracted by more than 30%.
Why the outlook changed
Moscow has stepped up attacks on factories, retailers and grain ships in the Black Sea, aiming to sap morale, cut off funding for Ukraine's defense, and raise costs for key western supporters. "Russia's attacks have led to a sharp fall in business activity, and losses in economic potential will constrain recovery," the central bank said, while adding it expects a 0.4% rebound in 2027 backed by more investment in defense manufacturing and other projects.
Damage on the ground and policy response
On Thursday, a drone struck the train station in Dnipro, Ukraine's third-largest city, killing at least 13 civilians. This week, Epicentr - a major home-improvement retailer - said its business had been "destroyed" following a series of Russian airstrikes that hit its distribution centers. Since July, grain exports have fallen 32% compared to the same period a year earlier, the Agriculture Ministry reported. In parallel, the central bank lifted its key policy rate and said inflation is set to accelerate more than it previously projected.
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The outlook for recovery
The central bank still sees a modest upturn of 0.4% in 2027. In plain English: the path back leans on defense industry spending and related projects.
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