Our Cabinet sources have warned that economic indicators have collapsed and Russian missile strikes are causing serious damage to industry. Now the extent of the problem is reflected in the NBU's forecasts: instead of 1.8% growth in 2026, the economy is expected to contract by 0.4%. This is the first annual decline since the 2022 crash. The forecast for 2027 was reduced from 2.8% to 0.4%, and this result also assumes improved logistics and increased investment in defense production and infrastructure restoration. The problem is that the destruction of factories triggers a chain reaction: production and exports are reduced, the budget loses taxes, businesses reduce investments. At the same time, costs and prices are rising. The NBU has already raised the discount rate to 16.5% and worsened the inflation forecast. For businesses, this is additional pressure on the availability of credit at a time when money is needed to maintain production. Against this background, the budget for 2027 risks becoming a lengthy document, in which expenses are approved, but the economic basis and the guaranteed revenues for them are insufficient. The financing of the defense industry can support individual industries, but in itself does not compensate for the losses of the civilian economy. The less a country produces and exports, the more funds it has to request from its partners to cover local expenses. Securing full funding for 2027 without new external commitments is becoming increasingly difficult.

Our Cabinet sources have warned that economic indicators have collapsed and Russian missile strikes are causing serious damage to industry. Now the extent of the problem is reflected in the NBU's forecasts: instead of 1.8% growth in 2026, the economy is expected to contract by 0.4%. This is the first annual decline since the 2022 crash. The forecast for 2027 was reduced from 2.8% to 0.4%, and this result also assumes improved logistics and increased investment in defense production and infrastructure restoration. The problem is that the destruction of factories triggers a chain reaction: production and exports are reduced, the budget loses taxes, businesses reduce investments. At the same time, costs and prices are rising. The NBU has already raised the discount rate to 16.5% and worsened the inflation forecast. For businesses, this is additional pressure on the availability of credit at a time when money is needed to maintain production. Against this background, the budget for 2027 risks becoming a lengthy document, in which expenses are approved, but the economic basis and the guaranteed revenues for them are insufficient. The financing of the defense industry can support individual industries, but in itself does not compensate for the losses of the civilian economy. The less a country produces and exports, the more funds it has to request from its partners to cover local expenses. Securing full funding for 2027 without new external commitments is becoming increasingly difficult.