Ukraine’s Economy Contracts 0.7% in Q3, Worse Than NBU Estimated

Ukraine’s economy shrank 0.7% year on year in the third quarter – a steeper fall than the 0.5% decline the National Bank of Ukraine (NBU) estimated on Oct. 29 when it raised its key interest rate. The official data shows a much more devastating toll on Ukraine’s economy as a result of Russia’s blockade of Ukrainian sea ports and strikes on production facilities and logistics than preliminary estimates by the central bank.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. Real GDP also fell 0.5% from the previous quarter on a seasonally adjusted basis, according to the flash estimate for July-September. Ukraine is experiencing the second contraction of Ukraine’s economy since the start of Russia’s full-scale invasion. On Oct. 29, the NBU flipped its 2026 GDP forecast from 1.8% growth to a 0.4% decline, making it Ukraine’s first annual contraction since 2022. Previously, the war had caused a 28,8% drop in Ukraine’s GDP in 2022, while it grew by 5.5% in 2023, by 2.9% in 2024, and by 1.8% in 2025. The estimate is based on preliminary statistical information on real growth or decline in output by type of economic activity. Preliminary GDP data for the third quarter will be published in December 2026. The central bank estimated that Russia’s blockade and strikes subtracted 1.9 percentage points from this year’s GDP. The losses at metallurgical and ore mining enterprises were also among the largest of impacts, as business performance also deteriorated in other industrial sectors, trade and agriculture, NBU governors stated during the monetary press briefing on Oct.29. Other Topics of Interest Ukraine Unlock $3B in Aid, but $6B and IMF Review Still at Risk Ukraine received €2.9 billion from the EU on Oct. 2 under the Ukraine Facility and met requirements for a €3.7 billion loan, but unfulfilled reforms threaten €5.8 billion and upcoming IMF reviews. The NBU estimates that consequences of aerial attacks alone will add around 0.7 percentage points to annual inflation. This also worsened the NBU’s year-end inflation forecast to 12.5% from 10.0%, and to 7.3% from 6.9% for 2027, before a return to the 5.0% target in 2028. Inflation was driven mainly by higher fuel prices tied to the war in the Middle East and the summer wave of Russian attacks on Ukraine’s warehouses and logistics. Olena Hrazhdan is the Business Reporter at Kyiv Post, covering Ukraine’s markets, business, and economic policy. While she reports broadly on economic issues, her core focus is banking, finance, monetary and fiscal policy. Olena previously wrote for leading Ukrainian business media and became a Fellow of the International Monetary Fund’s Journalism Fellowship in 2024.