The Ukrainian economy continues to shrink: IER worsens its assessment
The decline of the Ukrainian economy accelerated in September 2026. According to the Institute for Economic Research and Policy Consulting (IER), real GDP fell by 2.4% compared to September last year. In August, the decline was 1.9%.
This is stated in the Monthly Economic Monitor of Ukraine No. 261, published on October 20. Analysts also revised downward the previous estimate of August GDP after taking into account new statistical data on agricultural production.
The deepest contraction in economic activity is observed in transport, mining, and manufacturing. The main reasons remain Russian strikes on enterprises, restrictions on maritime exports, and disruptions to railway logistics.
According to IER calculations, real gross value added in the transport sector fell by 20% year-on-year in September. Due to restrictions on the operation of Black Sea ports and problems on the railway, freight flows must be redirected to road transport. However, carriers lack drivers, and truck delivery is significantly more expensive than sea transport.
In the mining industry, the decline was 12.3% due to a drop in iron ore extraction. At the same time, natural gas production partially supported the sector.
In manufacturing, gross value added decreased by 7%. The key factor was the reduction in metallurgical production after the shutdown of large enterprises damaged by Russian missiles and drones. Defense production restrained the overall decline, although enterprises in the sector lack long-term contracts.
Analysts warn that the shutdown of metallurgical plants and changes in the operating models of large trading companies may lead to a reduction in employment and the wage bill.
The situation in agriculture remains difficult. In September, real gross value added of the sector decreased by 5.6% year-on-year after a decline of approximately 12% in August. Due to export restrictions, agrarians are forced to store grain, including using temporary storage facilities and mobile elevators.
Logistical problems also worsen the financial capacity of farms to conduct sowing. Sown areas have already decreased, and persistence of current difficulties may negatively affect the 2027 harvest.
In trade, real gross value added decreased by 5.5%. Business activity was affected by reduced exports and destruction of warehouse premises. Some companies are changing their sales organization, reducing the use of warehouses.
According to IER estimates, real GDP of Ukraine decreased in the first nine months of 2026. Analysts believe that due to further deterioration of the economic situation in October, the full-year decline may be around 0.5%.
The institute emphasizes that high uncertainty leaves the possibility of further revisions to calculations. The figures presented are IER analytical estimates, not final State Statistics Service data.
Earlier, the Ministry of Finance reported almost zero growth of the Ukrainian economy and deterioration of budget revenues. Subsequently, the investment group ICU also forecast a GDP contraction due to destruction of industrial enterprises and disruption of export logistics.
Based on materials: Institute for Economic Research and Policy Consulting, Monthly Economic Monitor No. 261 (PDF)
