Economic contraction deepens
The economic contraction is clearly accelerating as Russian strikes hit industry and transport. Kyiv’s Institute for Economic Research and Policy Consulting (IER) estimated that Ukraine’s economy shrank 2.4% year-on-year in September. This decline follows a revised 1.9% contraction in August based on new agricultural data. IER reports that real GDP was lower over the first nine months of 2026 than a year earlier. The institute expects a full-year fall of about 0.5% due to October deterioration and a higher base. This follows a period where the IER reported 1.3% growth in July. Kyiv-based investment group ICU abandoned its growth forecast on October 14 and now expects GDP to shrink 0.6% this year and 1.9% in 2027, representing the worst performance since the first year of the full-scale invasion. The IER figures are analytical estimates, while the State Statistics Service publishes official GDP data quarterly.
| Economic Indicator | September (y/y) | August (y/y) |
|---|---|---|
| GDP | -2.4% | -1.9% |
| Transport | -20.0% | – |
| Extractive Industry | -12.3% | – |
| Manufacturing | -7.0% | – |
| Agriculture | -5.6% | -12.0% |
| Trade | -5.5% | – |
| Electricity and Gas | -11.0% | – |
Industrial and agricultural disruption
Transport value added fell 20% in September. Restrictions on Black Sea ports and railway problems push freight onto roads, where hauliers lack drivers and trucking costs far more than shipping by sea. Traffic through the three Odesa region seaports dropped by nearly 95% in August and September. Extractive industry output fell 12.3% because of lower iron ore and natural gas production. Manufacturing dropped 7% because Russian missiles and drones shut large steel plants. While defence production limited the fall, IER noted that arms makers lack long-term contracts. Agriculture contracted 5.6% after a fall of about 12% in August. Because exports are constrained, farmers are storing grain in bags, silos and mobile elevators. Farmers have also sown less land, a move the IER warned could hurt the 2027 harvest. Trade fell 5.5% because of lower exports and destroyed warehouses. Electricity and gas distribution fell by about 11%. The IER warned that metallurgical plant closures and changes in how large retailers operate could cut employment and the wage bill. The institute noted, "High uncertainty leaves the possibility of further revisions to calculations."
