Minus $6.6 billion and a new wave of price hikes: how Russian attacks have hit Ukraine’s economy

Russian attacks and the blockade of ports will cost Ukraine $6.6 billion. In addition, the economy will slow down significantly again, while prices for food and essential goods will rise, as they will come under pressure from the pace of currency depreciation, UNN reports, citing a forecast by the National Bank of Ukraine (NBU).

According to the regulator's estimates, the intensification of Russian shelling in the third and fourth quarters of the current year has already become one of the key factors behind the deterioration in economic dynamics. The destruction of production facilities, damage to warehouses, restrictions on maritime transport, and the forced restructuring of logistics routes are simultaneously reducing production volumes, restraining exports, and increasing business costs.

The National Bank emphasizes that the consequences of these processes will not be limited to 2026. Some of the negative impact on economic activity and consumer prices will persist throughout the following year as well.

Industry and trade: where the economy will suffer the greatest losses

According to the NBU's estimates, the metallurgical industry has suffered the most significant blow. The shutdown of the largest metallurgical enterprises will reduce real GDP in 2026 by 0.7 percentage points. The suspension of operations at industrial giants will also negatively affect a wide range of related industries. In particular, suppliers of raw materials, transport companies, and enterprises that support production processes will feel the deterioration. In addition, reduced orders from metallurgical enterprises will lead to lower  demand for goods and services in other sectors of the economy. Therefore,  the direct consequences of the destruction of industrial facilities are compounded by secondary losses spreading to adjacent industries.

Russian strikes on commercial and warehouse infrastructure have become a separate problem. The National Bank estimates their negative impact on real GDP at 0.3 percentage points. Damage to logistics centers and warehouse facilities is forcing companies to change supply routes, find new spaces to store products, and redistribute inventories. This creates additional costs for businesses, which may subsequently be incorporated into the final price of goods.

Overall, the cumulative negative effect of the intensification of Russian attacks and the blockade of ports in the second half of the year is estimated at 1.9 percentage points of real GDP. This refers to the loss of potential economic output compared with a scenario in which these destructions and restrictions had not occurred.

Ukraine will lose $6.6 billion in foreign trade

One of the most serious consequences of the Russian attacks has been the deterioration of opportunities for Ukrainian exporters. According to the National Bank's forecast, total losses in the foreign trade balance will amount to $6.6 billion. The largest share of this sum is related to restrictions on the operation of seaports, through which a significant portion of Ukraine's exports has traditionally been carried out. In particular, the blockade of the ports will lead to a $4.6 billion reduction in the value of agricultural exports.

Maritime transport is particularly important for the agricultural sector because of the large volumes of products that need to be supplied to foreign markets. Redirecting cargo along alternative routes complicates logistics, increases transportation costs, and limits exporters' opportunities.

The consequences for the metallurgical industry will be no less significant. Due to the shutdown of the largest enterprises, Ukraine will lose approximately $1 billion in metal product exports. In addition, the reduction in domestic metal production will necessitate increased imports to cover the shortage in the Ukrainian market. The NBU estimates the additional cost of imports at approximately $400 million. Another approximately $600 million will be lost due to reduced iron ore exports.

Food, medicines, and household chemicals: how shelling affects prices in stores

Russian attacks are also directly affecting the expenses of Ukrainian consumers. According to estimates by the National Bank, the consequences of the shelling will add approximately 0.7 percentage points to annual inflation. At the same time, the price increases affect a significant part of the consumer market. The regulator calculated that the direct or indirect impact of the attacks extends to approximately 40% of the consumer basket, taking into account the weight of the relevant goods in the structure of the Consumer Price Index.

Price pressures are felt most strongly in the food segment. Almost two-thirds of the additional inflationary effect falls specifically on food.  This primarily concerns goods that require a specific temperature regime to be maintained during storage and transportation. These are products belonging to the so-called "cold supply chain." Damage to warehouse infrastructure, disruptions to transportation, and changes to established delivery routes increase the costs of ensuring proper storage conditions for such goods. Accordingly, the additional costs are gradually reflected in retail prices.

Among non-food goods, the National Bank records the greatest impact of higher logistics costs in the following categories:

• household chemicals and personal hygiene products;
• household appliances;
• household goods;
• medicines.

The physical destruction of goods inventories as a result of Russian strikes has become a separate inflationary factor. When businesses lose products that were already stored in warehouses, the supply of the relevant goods on the market temporarily declines. With demand unchanged or relatively stable, this creates additional pressure on prices.

Why prices may remain high even after warehouses are restored

Despite the expected easing of certain inflationary factors, the National Bank draws attention to the long-term consequences of restructuring logistics.

After the destruction of large warehouse complexes, businesses are forced to switch to more decentralized storage and product-supply systems. Instead of concentrating substantial inventories in a single logistics center, companies may distribute them among several smaller facilities. This approach reduces the risk of losing all inventories as a result of a single strike, but at the same time requires additional expenditure.

For businesses, this means having to pay for a larger number of warehouse premises, organize more complex delivery routes, and transport goods in smaller batches. Consequently, even after the destroyed inventories have been replenished, the cost of supplying certain product categories may remain higher than before the attacks intensified.

What awaits the Ukrainian economy in 2027

The NBU warns that the negative impact of Russian shelling on economic activity and inflation dynamics will also be felt next year. This includes the consequences of the direct destruction of production facilities and restrictions on export opportunities, rising logistics costs, and the need for businesses to adapt to new operating conditions.

The national financial regulator warns that even with a gradual recovery in the supply of goods, businesses will need additional resources to rebuild damaged infrastructure, restore production, and restructure supply chains. At the same time, weaker economic activity will also affect domestic demand. Declining production, deteriorating business financial results, and rising costs may limit businesses' ability to expand their operations and invest.

Under these conditions, the economy is simultaneously facing two problems: slowing production and persistently elevated price pressures.

How the National Bank will respond

In view of the increased inflation risks, the NBU plans to maintain sufficiently tight monetary conditions.

The regulator's main task remains to contain inflation and gradually return it to the target level of 5%. To this end, the National Bank seeks to maintain the attractiveness of hryvnia savings and keep inflation and exchange-rate expectations under control. Maintaining sufficient returns on hryvnia instruments should encourage households and businesses to keep their savings in the national currency.

As a reminder

The NBU forecasts a 0.4% decline in GDP and 12.5% inflation in 2026. The impact of the attacks on the economy and prices will also be felt in 2027.