Ukraine's Central Bank Forecasts Economic Impact of Power Shortages Through 2026

Projected Economic Impact of Ukraine's Energy Shortage in 2026

According to НБУ: The National Bank of Ukraine (NBU) has released an analysis detailing how electricity deficits, caused by Russian attacks, will affect the nation's economy and inflation in 2026. The NBU's assessment indicates that the most severe power shortages since the full-scale invasion began were observed in December 2025 and January 2026. For the full year, the average deficit could reach 6%, negatively impacting Gross Domestic Product (GDP) and inflation rates. This analysis comes as Ukraine's energy grid remains a primary target in the ongoing conflict.

Artem Vdovychenko, Deputy Head of the Economic Analysis Department within the NBU's Monetary Policy and Economic Analysis Department, stated that the central bank continuously monitors the scale of energy deficits and their economic consequences. In its modeling, the NBU incorporates several key variables:

• national electricity demand;
• levels of domestic generation and imports;
• prevailing weather conditions.

The primary drivers of the electricity shortage are identified as Russian attacks on infrastructure and abnormally cold temperatures. Preliminary calculations suggest the power deficit could hit 12% in the first quarter of 2026.

Analysis of the Energy Deficit's Effects

To gauge the economic impact, the NBU examined data from the State Statistics Service's input-output tables and results from business surveys. The negative effect of the energy deficit on the economy in 2026 is estimated at approximately 0.4 percentage points. This drag is already factored into the NBU's forecast, which projects GDP growth of 1.8%. The deficit influences inflation through higher administrative price pressures and increased business costs.

The NBU's forecast further notes that while annual inflation is expected to decline in the coming months, it will temporarily accelerate again in the second half of the year. By the end of 2026, inflation is projected to be 7.5%. In subsequent years, a steady decline toward the NBU's 5% target is anticipated.

The NBU's assessment underscores the critical link between energy security and Ukraine's economic stability, particularly under wartime conditions.

Prolonged electricity shortages could have far-reaching consequences not only for economic growth but also for the country's social stability. The findings of this analysis may inform future actions by the government and businesses in planning energy resources and adapting to new realities. It also highlights the urgent need for investment in renewable energy sources and infrastructure modernization to ensure future stability.