According to Interfax-Ukraine, Ukraine’s economy showed the first signs of emerging from a recession in the first half of 2026, however, the high foreign trade deficit, inflationary pressures, and the dependence of public finances on international aid remain key macroeconomic risks, according to the latest issue of “Economic Monitoring.”
As noted by Maksym Urakin, Ph.D. in Economics and founder of the Experts Club information and analytical center, after real GDP fell by 0.6% year-over-year in the first quarter, the economy returned to growth in April–June.
In the second quarter, Ukraine’s real GDP increased by 0.4% compared with the same period last year and by 0.3% compared with the previous quarter. At the same time, the National Bank’s forecast projected growth of the Ukrainian economy at only 1.3% for the full year of 2026.
“Positive factors in the first half of the year included the resumption of at least minimal GDP growth, the return of international reserves to above $50 billion, stability in the foreign exchange market, more consistent international financing, and the adaptability of Ukrainian businesses. The main risks remain the war, the state of the energy sector, high production costs, a labor shortage, weak commodity exports, and a growing trade imbalance. Ukraine has a significant supply of external liquidity, but it cannot replace domestic economic growth,” Urakin noted.
Consumer inflation slowed to 7.2% in June, while core inflation accelerated to 8.1%. The NBU’s discount rate remained at 15%.
At the same time, after four months of decline, Ukraine’s international reserves increased by 12.1% in June—to $51.27 billion. The NBU’s foreign exchange interventions remained substantial.
Foreign trade remains one of the main structural risks to the Ukrainian economy. From January through June 2026, merchandise imports totaled approximately $49.3 billion, while exports amounted to about $21 billion. Thus, the merchandise trade deficit reached approximately $28.3 billion.
Public finances also remain under significant strain. Revenues to the General Fund of the state budget for the first half of the year totaled nearly 1.9 trillion UAH, while expenditures amounted to approximately 2.23 trillion UAH.
Approximately 1.4 trillion UAH, or about 63% of all General Fund expenditures, was allocated to the security and defense sector. The volume of international grants totaled 569.6 billion hryvnia.
According to Urakin, one of the main objectives of economic policy should be to transform significant imports of equipment, international funding, and defense spending into a foundation for creating new domestic production capacity.
“The next phase of economic policy should consist not only of maintaining financial stability, but also of transforming imported equipment, international funds, and defense spending into new production assets. The foundation for long-term development should be energy self-sufficiency, the defense-industrial complex, agricultural processing, machine building, production localization, logistics, digital technologies, and exports of high-value-added products,” says the founder of Experts Club.
At the same time, the first half of the year revealed significant differences between the world’s largest economies and emerging markets.
The Chinese economy grew by 4.7% in the first six months of 2026, while India posted a growth rate of about 7.8% in April–June.
Turkey continued to combine economic growth with extremely high inflation. In the second quarter, its GDP increased by 2.3% year-over-year and by 1.1% compared to the previous quarter, while annual inflation in June remained near 32%.
Brazil showed more moderate growth: its GDP in the second quarter increased by 2% year-over-year and by 0.5% compared to the previous quarter. In the first half of the year, the country’s economy grew by 1.9%, and annual inflation in June slowed to 4.64%.
“Key emerging economies ended the first half of the year with very different growth patterns. China grew by 4.7%, but its second quarter was weaker than the first, and domestic consumption lags significantly behind industrial output and exports. India continues to grow by nearly 8%, driven by the size of its domestic market and investment. Turkey remains an example of how inflation exceeding 30% limits the quality of economic growth, while Brazil is showing more moderate growth with gradual control of inflation. For Ukraine, the main conclusion remains the same: long-term growth requires its own industrial, technological, and export base,” Urakin emphasized.
In his assessment, the first half of the year confirmed the viability of Ukraine’s macrofinancial stabilization model, but at the same time revealed its limitations.
“The return of GDP to modest growth and the replenishment of reserves are positive signs; however, the $28.3 billion merchandise trade deficit, high underlying inflationary pressures, and the budget’s dependence on external financing reveal the limits of this model. Only by developing its own production and export base will Ukraine be able to transition from an economy of wartime stabilization to a model of sustainable postwar growth,” concluded Maksym Urakin.
“Economic Monitoring” is a monthly analytical and statistical publication led by Maksym Urakin, Ph.D. in Economics. The publication analyzes the main macroeconomic indicators of Ukraine and the world’s leading economies, as well as trends in GDP, inflation, public finances, international reserves, foreign trade, and key risks to economic development.
UkraineInvest, Ukraine’s agency for attracting and supporting investment, and Azerbaijan’s Agency for the Promotion of Exports and Investments (AZPROMO) have signed a memorandum of understanding aimed at expanding investment cooperation between the two countries, according to the Ukrainian Embassy in Azerbaijan.
The document was signed in Baku during the 2nd Azerbaijan International Investment Forum by AZPROMO Executive Director Yusif Abdullayev and UkraineInvest Executive Director Marina Khlistun, according to the Ukrainian Embassy in Azerbaijan.
The parties intend to foster direct contacts between businesses in both countries and create conditions for the implementation of joint investment projects.
Ukraine, in particular, is interested in attracting Azerbaijani capital to the country’s reconstruction projects. Potential areas of cooperation include infrastructure, energy, transportation and logistics, the agricultural sector, industry, and technology.
Yuriy Gusev, Ukraine’s ambassador to Azerbaijan, praised the efforts of the leadership and teams at AZPROMO and UkraineInvest in translating the two countries’ strategic partnership into concrete joint investment projects.
AZPROMO also confirmed the signing of the memorandum. According to the Azerbaijani agency, the document between AZPROMO and UkraineInvest was part of a package of 11 agreements signed during the international investment forum.
In total, the agreements concluded during the forum cover construction and development, the digital economy, renewable energy, industry, agriculture, pharmaceuticals, finance, water management, sports, and investment promotion.
The II Azerbaijan International Investment Forum took place in Baku on September 25–26, 2026, under the patronage of Azerbaijani President Ilham Aliyev. The event was organized by the Ministry of Economy of Azerbaijan and AZPROMO in strategic partnership with The European House – Ambrosetti.
UkraineInvest is the state agency responsible for attracting and supporting investment. The organization assists foreign and Ukrainian investors, provides consulting, analytical, and informational support, and participates in promoting Ukraine’s investment projects in international markets.
The Ukrainian Ministry of Defense estimates that defense spending will rise to $175 billion in 2027 from $155 billion in 2026; the government’s draft state budget currently allocates $100 billion, First Deputy Minister of Finance Roman Yermolichev said during a budget discussion organized by the Center for Economic Strategy that week.
“There is a need for $70 billion. And here, various instruments must be utilized, including cooperation with international partners, not only to attract funding but also to use various instruments that have been in place for the past four years: ‘Ramstein,’ PURL, and all other mechanisms related to the procurement of military equipment,” the First Deputy Minister noted.
He emphasized that when planning defense expenditures in the 2027 draft state budget, the Ministry of Finance significantly changed its approach compared to previous years, when initial allocations were set below actual needs.
“We have now changed this situation and increased funding for the defense sector immediately: funding has been increased by 518 billion hryvnia—that is, from 4.4 trillion to 4.9 trillion hryvnia next year,” said Yermolichev.
The First Deputy Minister explained that the 2026 state budget does not currently include an additional 300 billion hryvnias for the payment of military pay—which was increased as of July 1—and defense-related social benefits, which will be financed from domestic sources, but this 300 billion UAH has already been included in the 518 billion UAH increase in defense spending in the draft 2027 state budget.
At the same time, he clarified that the calculations were made without taking into account the factor of an increase in military personnel, which is difficult to predict.
“Therefore, we hope that by the beginning of the year, we will be in a more or less stable position. Additionally, we have increased the allocation to the Reserve Fund under the Ministry of Finance: this year, we allocated approximately 140 billion hryvnias from the General Fund, whereas for next year, we have already allocated 200 billion hryvnias from the General Fund,” Yermolichev concluded.
As previously reported, the funding shortfall for the Ministry of Defense’s stated $155 billion war requirement for 2026 was, until recently, estimated at $27 billion, but Prime Minister Serhiy Koretsky and the Ministry of Finance stated that $7 billion—or about 300 billion hryvnias—of this amount has been secured through domestic resources, specifically the Ministry of Finance’s Reserve Fund.
As for next year, according to the agency “Interfax-Ukraine,” out of the $70–75 billion in war-related expenditures not covered by the state budget, sources of funding have been identified for approximately $20 billion, while the remainder still needs to be secured.
DEFENSE, FUNDING, Ministry of Defense, STATE BUDGET, UKRAINE
In January–August 2026, Ukraine increased its imports of tin and tin products 2.4-fold compared to the same period last year, reaching $6.352 million.
According to statistics released by the State Customs Service of Ukraine, imports of tin and tin products in August totaled $830,000.
Exports of tin and tin products in January–August 2026 totaled $740,000, and in August—$45,000, compared to $104,000 in January–August 2025.
As previously reported, Ukraine increased its imports of tin and tin products by 36.5% in 2025 compared to 2024, reaching $4.352 million. Exports of tin and tin products totaled $241,000, compared to $389,000 for the 12 months of 2024.
Tin is used primarily as a safe, non-toxic, corrosion-resistant coating, either in its pure form or in alloys with other metals. The main industrial applications of tin are in tinplate (tinned iron) for the manufacture of food packaging, in solders for electronics, in plumbing pipes, in bearing alloys, and in coatings made of tin and its alloys. The most important tin alloy is bronze (with copper).
Starting January 1, 2027, the UK will significantly reduce government support for the Homes for Ukraine program: monthly payments to British households providing housing to Ukrainians will drop from £350 to £100, according to The Guardian.
As a result, the so-called “thank you payment” will be reduced by 71.4%.
The new rules will apply to both current hosts already participating in Homes for Ukraine and new participants in the program.
At the same time, the British government is also cutting funding to local authorities responsible for implementing the program. The payment to municipalities per arriving Ukrainian will decrease from 5,900 to 3,300.
According to The Guardian, since the launch of Homes for Ukraine in March 2022, 181,000 of the approximately 234,000 Ukrainians who arrived in the UK after the start of the full-scale war have received support through the program. The British government has already allocated more than £1.81 billion to implement the program.
The funding cut is raising concerns among Ukrainians and host families about the program’s continued ability to provide free housing. Program participants interviewed by The Guardian said that the reduction in payments could force some hosts to withdraw from the program.
As one option for continued residency, the British government suggests that hosts could transition from their current status to a standard landlord-tenant relationship, under which Ukrainians would pay for their housing themselves.
This could be a particularly sensitive issue for elderly Ukrainians, people with disabilities, and low-income families, who would find it difficult to pay rent on their own in the British housing market.
It is important to note that the £350 is not rent paid to Ukrainians, but a government payment to the host household. Only one such payment may be made per address, regardless of the number of guests staying there.
For Ukrainians who have transitioned from the Homes for Ukraine visa to the Ukraine Permission Extension (UPE) program, payments to the host may be made for no more than 18 months from the date the guest first transitioned to UPE. After this period, the government’s “thank you payment” ceases.
Homes for Ukraine was launched by the British government on March 14, 2022. The program allowed UK residents to provide Ukrainians with housing in their homes or separate properties, while receiving a monthly compensation payment from the government.
The Cabinet of Ministers of Ukraine has refined the procedure for determining the maximum production capacity of equipment used to produce ethyl alcohol and bioethanol, according to the industry publication SEEDS.
The government adopted the corresponding resolution on September 23, 2026. The new rules are intended to ensure a more accurate and technically sound calculation of equipment capacity. This metric is used to determine the guaranteed excise tax liability for alcohol and bioethanol producers.
In particular, the calculations now require determining the actual capacity of processing equipment and taking it into account. The regulations also clarify which changes to equipment should be considered a change in its maximum capacity.
The government has established a mechanism for performing the updated calculation and provided for the possibility of accounting for permissible deviations in actual capacity related to the specifics of the production process or the characteristics of measuring instruments.
One of the most significant changes is the allowance for actual production capacity of process equipment to deviate from the calculated maximum production capacity by up to 3% inclusive.
In addition, the procedure for applying coefficients related to the cleaning and disinfection of production equipment has been clarified. Calculations will take into account the possibility of performing such work during scheduled production shutdowns.
The government explains the need for these changes by citing the technological characteristics of the alcohol industry. The actual productivity of equipment may be influenced by the characteristics of the raw materials used, auxiliary materials, seasonal changes in energy source parameters, and other factors, which in and of themselves do not imply a change in the enterprise’s maximum technical productivity.
Thus, the updated procedure must simultaneously take into account both the technical characteristics of the equipment and the actual technological conditions of ethyl alcohol and bioethanol production.
The mechanism for determining maximum production capacity was introduced by Cabinet of Ministers Resolution No. 350 of March 28, 2025, in accordance with amendments to tax legislation regarding the specifics of excise taxation of ethyl alcohol and bioethanol. The calculation is performed by an authorized state agency based on the technical and technological parameters of production.
According to the government’s assessment, updating the methodology should increase the predictability of operating conditions for alcohol and bioethanol producers and ensure a more accurate determination of the indicators used to calculate excise tax liabilities.
ALCOHOL, Bioethanol, CABINET OF MINISTERS, EXCISE TAX, UKRAINE
