Ukraine’s GDP contracted by 0.5% y/y in Q1

The economic downturn was caused by intensified shelling, severe cold weather, and power shortages

According to preliminary estimates, Ukraine’s real GDP contracted by 0.5% in the first quarter of 2026 compared to the same period last year. At the same time, the figure decreased by 0.7% compared to the previous quarter (seasonally adjusted). This was reported by the State Statistics Service.

The preliminary GDP estimate is based on preliminary statistical data regarding real growth or decline rates in production volumes by economic activity. This marks the first quarterly decline in Ukraine’s GDP since the first quarter of 2023, when the Ukrainian economy contracted by more than 10%.

The reasons for the contraction of the Ukrainian economy in January–March were intensified Russian missile and drone strikes, severe cold weather, and an electricity shortage, which forced a significant number of enterprises to completely suspend operations.

Revised data on Ukraine’s GDP for the first quarter of 2026 will be released in June 2026.

At the same time, the NBU estimated real GDP growth in the first quarter of 2026 at 0.2% year-on-year. Taking into account the weaker first-quarter results, the challenging situation in the power grid, and the accumulation of negative economic effects from the war in the Middle East, the NBU has downgraded its GDP growth forecast for 2026 to 1.3% year-on-year.

As a reminder, Ukraine’s real GDP grew by 1.8% in 2025, compared to 3.2% in 2024. According to the State Statistics Service, Ukraine’s nominal GDP last year stood at UAH 8.9 trillion.

As reported by GMK Center, Ukraine’s GDP in 2025 was 21% below its pre-war level. The country needs new drivers of growth, which can only be found in the industrial sector. The main factor supporting the economy was external financing, which amounted to $52.4 billion last year.