The intensification of Russia's attacks is slowing the economy and pushing prices up — the NBU has issued a forecast
Kyiv • UNN
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.
The intensification of Russian attacks on businesses and infrastructure is affecting Ukraine’s economy, reducing GDP and pushing inflation higher. The negative consequences of this will also be felt in 2027. This is stated in the NBU’s October 2026 inflation report, UNN writes.
Details
The National Bank noted that the intensification of Russian attacks on businesses and infrastructure, together with the blockade of ports, had led to a sharp slowdown in economic activity and increased price pressures.
According to the NBU’s estimates, the combined negative effect of these events in the third and fourth quarters of 2026 will result in real GDP in 2026 being 1.9 percentage points lower than it would have been in their absence, while annual inflation will be 0.7 percentage points higher.
The foreign trade balance deficit will reach $6.6 billion, primarily due to a reduction in agricultural exports. The negative consequences of the shelling for economic activity and price dynamics will also be felt in 2027, the NBU noted.
The intensification of inflationary pressures, as noted, will require the NBU to maintain sufficiently tight monetary conditions to preserve the attractiveness of savings in hryvnia and keep inflation and exchange-rate expectations under control. The main task will remain ensuring a sustained slowdown in inflation to the 5% target, while in making its decisions the NBU will take into account the weakening of economic activity and domestic demand.
According to the NBU’s forecast, inflation will accelerate to 12.5% in 2026 and begin to decline next year: to 7.3% at the end of 2027 and to 5% in 2028. Real GDP will contract by 0.4% this year, grow by 0.4% in 2027, and by 2.2% in 2028.
The intensification of shelling limits the economy’s potential and hampers economic recovery
According to the NBU’s forecast, real GDP will decline by 0.4% in 2026. The consequences of large-scale destruction of production, energy and logistics infrastructure will be only partially offset by increased fiscal stimulus at the end of the year.
The loss of economic potential will hamper economic recovery in 2027–2028 as well. At the same time, the NBU’s forecast envisages real GDP growth of 0.4% in 2027, driven by increased public investment in the defense industry and the restoration of critical infrastructure. In 2028, economic growth may accelerate to 2.2% amid a revival in consumer demand, larger harvests and increased private investment as security risks decline.
Inflation will rise
Inflation will rise in the coming months and accelerate to 12.5% in 2026, the NBU said. Higher fuel prices and the consequences of the destruction of production and logistics infrastructure will continue to increase business costs and affect prices through direct and secondary effects. In addition, price pressures will intensify against the backdrop of an expected expansion of fiscal stimulus at the end of the year.
Inflation is forecast to decline to 7.3% in 2027 and to the 5% target in 2028. Inflationary pressures will gradually weaken as the effects of higher fuel prices fade and wage growth slows amid subdued economic activity. The NBU’s monetary policy measures will also have a significant impact.
The forecast is based on the assumption that Ukraine will fulfill its commitments under cooperation programs with international partners, which will provide financial support in the necessary amounts. Important technical assumptions underlying the forecast also include improved logistics from mid-2027 and a gradual decline in security risks toward the end of the forecast horizon. The forecast takes into account the consequences of the destruction already caused by Russian attacks; however, the risks of further losses remain high, the NBU noted.