Russian attacks on energy system slow Ukraine's economy

Ukraine’s GDP growth is slowing amid Russian attacks on its energy system, with a 4.1% growth rate in April compared to 4.8% in March, 5% in February, and 5.2% in January, according to the Institute for Economic Research and Policy Consulting’s (IER) economic monitoring.

“Due to the intensification of shelling, a significant part of the maneuvering generation was damaged, leading to power outages for businesses and households. Restrictions on electricity supply will further decline GDP growth,” said Oleksandra Betliy, a leading researcher at the IER.

However, there is positive news regarding the growth of exports and imports, thanks to improved logistics through both the sea corridor and road transport. Betliy noted that in April, rail transportation decreased by 5% compared to March and by 29% compared to April 2023, totaling 15.2 million tons.

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The manufacturing industry saw a 10% growth in real gross value added (GVA), while the mining industry saw around 3% growth. Metallurgy and iron ore mining have been revived due to better logistics. Construction has also seen high growth, partly due to the construction of fortifications. The growth rate of trade slowed to 3% against the backdrop of a higher statistical base.

Read also: Three DTEK thermal power plants seriously damaged in latest Russian attack on Ukrainian energy

Tax and customs services exceeded their revenue targets in April, and the National Bank of Ukraine doubled its revenue contributions to the budget.

The government expects GDP growth to slow to 4.6% this year, while the National Bank predicts a slower growth rate of 3%. GDP growth in January-March this year was 4.5%, while the NBU estimated it at 3.1%, according to the Economy Ministry.

Earlier, the New York Times reported that the increasing number of Russian strikes on Ukraine’s power plants and energy grid was raising concerns that the rolling blackouts would not only affect consumers but also hurt Kyiv's defense industry when it was most needed.

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