Since March 2022, the Centre for Economic Strategy (CES) has been preparing monthly reviews of Ukraine’s economy during a full-scale war. The special topic of the February review is: «How does attacks on the energy system affect business activity?».
All previous reviews can be found under the link.
Energy outages in February weighed on business activity, but the electricity situation improved in March thanks to repairs and favourable weather. External risks increased amid the Iran war, pushing up oil and gas prices and weakening the hryvnia. Credit growth reached a record high, increasingly driven by market-based lending. But access to long-term finance remains constrained by war-related risks. The banking system is highly liquid but risk aversion in wartime and high real interest rates keep the credit-to-GDP ratio far below regional peers.
Key changes in the Ukrainian economy in March:
- Sectoral analysis: Business sentiment and business activity deteriorated in February amid essential electricity outages. The energy situation improved in March thanks to repairs and sunny weather. The sowing campaign for summer crops has started, and the condition of winter crops is good. The Iran war has driven up fuel and gas prices and increased the risk of supply disruptions. Limited access to loans almost does not impede the increase in production.
- Fiscal sector: In February, tax revenues amounted UAH 154 bn, adding 15% compared to January, but the plan was still not met. The biggest increase was in CPT by 3.2 times due to its seasonality. Total spending of state budget in January 2026 showed significant reduction in both monthly and annually terms. The “5-7-9%” business support program leads economic activity expenditures in 2026, with UAH 18 bn planned for it – the same amount as in 2025.
- Monetary sector: Consumer inflation accelerated to 7.6% y-o-y in Feb 2026 as the winter energy shock — driven by a 30% electricity supply deficit — passed through to production and logistics. Externally, the onset of the Iran war on February 28 triggered a global oil shock and a “safe haven” flight to the US dollar, causing the hryvnia to weaken significantly against the USD in the following weeks.
- Special topic: Credit growth is record high by January 2026, driven increasingly by market-based lending as the influence of the “5-7-9%” subsidised program declines. New lending remains highly concentrated in Trade, Processing, and Agriculture, with a 30% uptick in medium-term loans to support energy autonomy and defense-adjacent production. Despite NPLs falling to a 15-year low of 13.9%, bank lending still only finances 5% of capital investments, and long-term credit remains stagnant due to persistent war-related risks.
See our report below for further details.
Expert discussion and Q&A:
- Nataliia Butkova-VitvitskaMember of the Management Board at Oschadbank, in charge of Micro, Small and Medium Business;
- Sergiy NikolaychukFirst Deputy Governor at the National Bank of Ukraine;
- Andrii TeliupaAdviser to the Minister of Economy of Ukraine.
Moderator: Maria RepkoDeputy Executive Director of the Centre for Economic Strategy.
This event has been funded by the UK International Development from the UK government; however, the views expressed do not necessarily reflect the UK government’s official policies.
