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KYIV: Ukraine\u2019s economy is being crippled by intensifying Russian strikes hitting key sectors and its GDP could slump by 1.5 points in 2026, Kyiv officials said Saturday, warning of a \u201cvery difficult\u201d winter ahead.<\/p>\n
Russia, which devastated Ukraine\u2019s energy sector during the course of 4.5 years of war, has since this summer stepped up a campaign of missiles and drones that Kyiv is struggling to intercept.<\/p>\n
These have severely restricted grain exports in the Black Sea \u2014 a crucial source of Kyiv\u2019s revenue.<\/p>\n
The strikes have also targeted steel companies, another key sector, as well as supply chains \u2014 notably in the rail sector \u2014 and major warehouses.<\/p>\n
\u201cThe economy is in the most difficult situation,\u201d Ukraine\u2019s Prime Minister Sergiy Koretsky said during the annual Yalta European Strategy forum in Kyiv.<\/p>\n
He said the intensity of the strikes and the level of destruction have increased.<\/p>\n
\u201cWe anticipate a very difficult winter in terms of both critical infrastructure, which is being destroyed every day by Russian attacks, but also in terms of overall economic conditions in the country,\u201d said Ukraine\u2019s economy minister, Oleksandr Kravchenko.<\/p>\n
Kyiv estimates that \u201cthe total destruction of infrastructure and assets are likely to be close to $10 billion\u201d this year.<\/p>\n
This destruction and the blockage of seaports are likely to reduce national GDP by 1.5 points, he added, with some Western experts calling the situation \u201ccatastrophic.\u201d<\/p>\n
– Rising war costs –<\/p>\n
Roksolana Pidlasa, the head of the budget committee in Ukraine\u2019s parliament, described a bleak outlook.<\/p>\n
\u201cIt can get worse, but it\u2019s already bad now,\u201d she told the same forum.<\/p>\n
\u201cRussia specifically targets revenue-generating industries by attacking grain corridors, by attacking seaports and metallurgical plants,\u201d she said at the same forum.<\/p>\n
\u201cIt is not something that you could reconstruct quickly.\u201d<\/p>\n
Ukraine\u2019s largest steelworks, ArcelorMittal Kryvyi Rig, said Saturday that a Russian missile strike killed two of its workers and damaged facilities.<\/p>\n
Kyiv has also upped its retaliatory strikes on Russia, targeting oil facilities, factories and warehouses.<\/p>\n
President Volodymyr Zelensky hopes his US counterpart Donald Trump will pressure Russia to ensure Black Sea ports reopen and for a mutual suspension of strikes on energy sites.<\/p>\n
He warned of the risk of food crises in African and Asian countries, saying Moscow was also unable to export its grain through the Black Sea. Both countries are key global suppliers of grain.<\/p>\n
– Food and energy truce –<\/p>\n
\u201cAt the very least, again, if peace is impossible from today… we can at least resolve the issue of an energy truce, a food truce, food security; such decisions can be made,\u201d he told the Kyiv forum this weekend.<\/p>\n
He called on resolving these \u201cnow\u201d and \u201cnot in winter\u201d.<\/p>\n
At the same time, Kyiv\u2019s military spending is rising.<\/p>\n
Pidlasa said that in 2024 \u201cone day of war costs 140 million US dollars per day, this year it costs 190 million dollars a day.\u201d<\/p>\n
Kyiv, she said, has had to start using international aid this year to even pay its soldiers\u2019 wages.<\/p>\n
The release of nearly $30 billion in international aid intended to finance this year\u2019s budget deficit is conditional upon parliament passing draft laws demanded by Western countries, Koretsky said.<\/p>\n
These include anti-corruption measures after Ukraine was hit by several large-scale graft scandals during the war with Russia.<\/p>\n
But parliament is struggling to approve suggested laws, which include unpopular measures such as imposing duties on parcels from abroad, intended to boost revenues.<\/p>\n<\/div>\n