Dragon Capital slashes outlook, sees Ukraine GDP dropping 0.5% in 2026, 1.0% in 2027
The intensification of Russian attacks since July 2026 has inflicted significant damage on Ukraine's economy, prompting leading Ukrainian investment company Dragon Capital to substantially downgrade its macroeconomic forecast: it now expects real gross domestic product (GDP) to decline by 0.5% this year and by 1.0% next year, whereas before the escalation it had forecast possible growth of 1.5%…
Recent escalation of Russian attacks has prompted Dragon Capital, a leading Ukrainian investment firm, to drastically revise its macroeconomic forecasts. The company now expects Ukraine's real GDP to contract by 0.5% in 2026 and by 1.0% in 2027, a sharp turnaround from its previous predictions of 1.5% growth for 2026 and 0.5% for 2027.
The downgrade is contingent on the assumption that Ukrainian air defenses will eventually gain the ability to successfully intercept jet-powered drones; however, the persistent shortage of interceptors for ballistic missiles remains a significant hurdle.
Dragon Capital's press release highlights that the enemy's expanded range of targets under attack suggests a more substantial negative impact on the economy than initially anticipated. A considerable portion of Ukraine's industrial heartland, comprising key metallurgical enterprises, falls within the range of ballistic missiles. While damaged production facilities may ultimately be repaired, the threat of repeated strikes will impede the resumption of full-scale operations in steelmaking.
The firm suggests that the resumption of grain exports by sea could transpire in the following year following a diplomatic agreement akin to the 2022-2023 grain corridor. However, reaching a comprehensive agreement encompassing the contentious energy truce appears improbable. A blockade of Black Sea ports may result in a 2.2% reduction in real GDP if agricultural exports are reallocated to alternative routes, notably Danube ports.
Should grain exports by sea be unblocked prior to the commencement of the spring sowing campaign, these losses could be mitigated by 1.5 percentage points, to 0.7%. Nevertheless, an additional 1.5% GDP loss is projected due to the cessation of steel production and ensuing decline in iron ore mining, given the infeasibility of redirecting these shipments to export under blocked port conditions.
World Bank and European Bank for Reconstruction and Development (EBRD) have similarly revised Ukraine's economic growth forecasts, lowering their estimates for 2027 from 4% to 1.5% and for 2026 from 1.2% to 1.5%, respectively. Meanwhile, Economy and Environment Minister Oleksandr Kravchenko disclosed a downward revision of the 2027 GDP growth forecast by 0.3-0.5 percentage points and 2026 by 0.5% compared to the previously incorporated pessimistic scenario.
The National Bank of Ukraine (NBU) also reduced its estimate for real GDP growth this year to 1.1-1.2%, contrasting with its previous projection of 1.8% at the end of July.
Written by urgent.news from Interfax-Ukraine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
