What changed in the outlook
On Thursday, the National Bank of Ukraine cut its 2026 forecast from 1.8% expansion to a 0.4% decline. If realized, that would be the first annual drop since 2022, when output fell by more than 30%.
The shift follows heightened pressure on the economy from ongoing attacks. As the bank put it, "Russia's attacks have led to a sharp fall in business activity, and losses in economic potential will constrain recovery."
The damage on the ground
Moscow has targeted Ukraine's economic arteries, striking factories, retailers and cargo ships moving grain in the Black Sea to sap morale, curb the country's ability to fund its defense, and raise costs for key western supporters. Separately, the Agriculture Ministry said grain exports have fallen 32% since July compared with last year.
The toll is showing up in company statements and casualty counts. Epicentr, a major home improvement chain, reported its operations were "destroyed" following a rapid barrage by Russia that struck its distribution hubs. On Thursday, a drone struck a train station in Dnipro, the nation's third largest city, leaving at least 13 civilians dead.
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Policy and the near-term picture
The central bank raised its key policy rate on Thursday, noting inflation will pick up more than it previously expected. It also projects a modest 0.4% recovery in 2027, supported by increased spending on defense and other investment.
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