GDP drops 0.6% in Q1 2026, growth outlook remains subdued

UKRAINE - In Brief 14 Jun 2026 by Dmytro Boyarchuk

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Ukrainian GDP dropped by 0.6% in Q1 2026, according to the updated estimates of the State Statistics Committee of Ukraine. Devastating missile and drone attacks on energy infrastructure through January and February 2026 are behind the GDP drop. On the demand side, the drop is reflected in an 8.0 ppt decline in net exports, a 1.5 ppt drop in gross capital formation, and a 0.6 ppt drop in government consumption. Net exports went deeper into the red on the back of stagnating exports and ballooning energy equipment imports (to replace destroyed facilities and to install some reserve capacity). The contraction in capital is the direct result of persistent attacks on infrastructure and rather sluggish repair activity. Government consumption eased due to delays with external funding and rather cautious behavior of Minfin in terms of expanding spending, with uncertainty around the IMF program and the delayed €90 billion EU loan (Ukraine Support Loan). On the supply side, the main casualties were once again the energy sector (-15.2% y/y), transportation (-9.4% y/y), real estate operations (-4.4% y/y), education services (-4.8% y/y), and construction (-4.5% y/y). All sectors were clearly affected by air strikes and the consequences of destruction, which, among other things, caused long periods of inactivity — for instance in the education sector in the most damaged areas. This development at the start of the year prompted a revision of 2026 GDP growth estimates. The NBU, for instance, now anticipates very modest 1.3% GDP growth this year, and a lot will depend on how the agro-sector performs through the upcoming months.