KAMIANSKE (Ukraine), Nov 3: Ukraine’s already strained economy is facing mounting pressure as intensified Russian attacks disrupt industrial production, damage critical infrastructure and obstruct the export of agricultural commodities, threatening the country’s ability to finance its wartime requirements.
At Kamet Steel, once a major contributor to Ukraine’s industrial output, production has come to a standstill following a Russian missile attack. The industrial complex in Kamianske now stands largely deserted, with damaged equipment, scattered debris and silent furnaces reflecting the growing impact of the conflict on the country’s manufacturing sector.
The agricultural industry is facing similar difficulties, with large quantities of grain remaining stored in fields and silos as farmers struggle to secure affordable transportation and reliable export routes. Continued attacks on ports and shipping infrastructure have made international trade increasingly expensive and dangerous.
Russia’s intensified air campaign has increasingly targeted factories, energy facilities, railways and transportation networks that support Ukraine’s economy. Frequent attacks involving ballistic missiles and jet-powered drones have interrupted industrial operations, increased logistics expenses and weakened the country’s ability to generate revenue.
The consequences are extending beyond individual businesses, affecting employment, government tax collections, infrastructure development and the availability of funds for essential public services.
Ukraine’s central bank recently revised its economic outlook, projecting a contraction of 0.4 per cent in 2026 instead of the previously anticipated growth of 1.8 per cent. The downgrade reflects the economic damage caused by Russian attacks and increasing international energy prices.
Governor Andriy Pyshnyy also indicated that the inflation forecast had been increased to 12.5 per cent from the earlier estimate of 10 per cent made in July.
The deteriorating economic outlook comes at a difficult time for Kyiv, which spends approximately 40 per cent of its gross domestic product on defence. According to Torbjorn Becker, director of the Stockholm Institute of Transition Economics, Ukraine cannot independently meet such enormous financial requirements. Increasing taxes alone would generate only a limited share of the funding needed.
Steel Industry Faces Severe Disruption
Ukraine’s steel industry, historically one of the country’s most important economic sectors, has suffered a major setback following attacks on industrial facilities operated by Metinvest Group, a leading mining and metals producer.
Kamet Steel, located in the industrial city of Kamianske, contributed more than a quarter of Ukraine’s total steel production in 2025. The facility employed thousands of workers and manufactured steel and pig iron used in domestic construction and industrial activities.
Its operations also supported international supply chains, including the delivery of semi-finished steel to Metinvest’s Bulgarian facility, which served customers in Bulgaria and other European markets.
However, five ballistic missiles struck the industrial complex on September 5, forcing production to stop and creating significant uncertainty about its future operations.
The shutdown has affected several interconnected industries, including construction, mining, engineering, energy and transportation. Companies dependent on the facility’s output are also facing financial difficulties, with potential consequences for employment and business continuity.
Oleksandr Tretyakov, chief executive of Kamet Steel, described the situation as the most difficult period for Ukraine’s steel industry since the Second World War.
He pointed out that steel production had previously contributed approximately 6 per cent to Ukraine’s GDP, but its contribution had effectively fallen to zero following the disruption.
The closure has also created problems for Ukrzaliznytsia, the national railway operator, which depends significantly on freight transportation, including steel-related shipments, for its revenue.
Tretyakov warned that businesses connected to the plant could face job losses or even bankruptcy if industrial activity does not resume.
He also expressed concern that European Union trade restrictions could complicate the industry’s recovery by limiting opportunities for Ukrainian steel exports.
The disruption demonstrates how attacks on a single major industrial facility can affect an entire network of suppliers, transport companies, manufacturers and international customers.
Grain Exports Hit by Port Attacks and Rising Costs
Agriculture remains another crucial pillar of Ukraine’s economy, accounting for as much as 60 per cent of the country’s foreign currency earnings.
However, Russian attacks on Black Sea ports, vessels and logistics infrastructure have severely affected the movement of agricultural commodities, leaving exporters struggling to fulfil international orders.
The disruption has come at a particularly difficult time for farmers, who require revenue from their current harvests to purchase seeds, fertilisers and other inputs for the next agricultural season.
According to maritime data and analytics company Lloyd’s List Intelligence, commercial shipping activity through Ukraine’s Black Sea ports has declined sharply.
Only 21 vessel arrivals were recorded at these ports in August, representing a fall of approximately 90 per cent compared with the same month a year earlier.
Higher insurance premiums, security concerns and the continuing threat of Russian attacks have discouraged shipping companies from operating in the region.
The danger has also increased for maritime workers, with dozens of sailors reportedly killed in attacks during the year.
Volodymyr Scavinskyi, trade director at Nibulon, one of Ukraine’s leading agricultural exporters, warned that the disruption could reverse years of investment and improvements in the country’s export infrastructure.
He said the industry could eventually be forced to rebuild its operations from the beginning if the situation continues.
With major Black Sea routes becoming increasingly difficult to use, exporters have turned towards alternative transportation corridors through the Danube River.
Danube Route Offers Limited Relief
Ukraine’s smaller ports along the Danube have experienced increased shipping activity as exporters search for alternatives to the disrupted Black Sea routes.
Although these facilities continue operating despite the threat of Russian bombardment, their limited capacity and geographical restrictions have made transportation considerably more expensive.
The Sulina Channel in the Danube delta is too shallow to accommodate the largest cargo vessels, forcing ships to wait for extended periods before entering or leaving the river.
The situation has been further complicated by exceptionally low water levels caused by drought.
According to Scavinskyi, barges that previously transported approximately 1,500 tonnes of agricultural commodities are now carrying only 800 to 900 tonnes because of the reduced water depth.
Consequently, exporters require almost twice as many barges to transport equivalent quantities of grain, increasing operational expenses and delaying deliveries.
The cost of transporting one tonne of corn from central Ukraine to Spain, which had reached approximately USD 50 earlier in the year, has now climbed to as much as USD 150.
The higher expenses are reducing the competitiveness of Ukrainian agricultural products in international markets and leaving exporters with smaller profit margins.
Scavinskyi also cautioned that using alternative shipping routes does not eliminate the security risks associated with the conflict, as vessels continue to face uncertainty during their journeys.
Farmers Struggle to Secure Buyers and Finance Next Season
The transportation crisis has created another challenge for agricultural producers, many of whom are struggling to sell their harvested crops at commercially viable prices.
Olena Shelest, commercial director at HarvEast, a major agricultural holding, said the company was storing large quantities of wheat in silo bags while waiting for market conditions to improve.
However, the company cannot hold its produce indefinitely because the grain must eventually be sold to generate funds for the next planting season.
The uncertainty has created a difficult financial situation for agricultural businesses, which must balance the need to secure better prices against the immediate requirement for working capital.
Shelest said corn prices had fallen significantly, declining from approximately USD 210 to USD 230 per tonne last year to around USD 130 currently.
The decline has further reduced farmers’ earnings at a time when transportation and production expenses are increasing.
HarvEast previously exported approximately 60 per cent of its sales through Black Sea ports. However, the smaller Danube facilities at Reni and Izmail can collectively handle only around 15 to 20 per cent of Ukraine’s overall national export volumes, according to Shelest.
Land transportation through Poland and other European countries provides another option, but these routes involve higher logistical expenses.
The growing financial pressure is also forcing farmers to reconsider spending on agricultural inputs. Some are reducing purchases of seeds and fertilisers to control costs.
Such decisions could affect crop quality and production levels in the coming season, creating the possibility of a wider agricultural slowdown.
The current export difficulties could therefore extend beyond immediate financial losses and affect Ukraine’s future food production and its position in international agricultural markets.
Government Faces Growing Budget Deficit
The combined impact of industrial shutdowns, declining agricultural earnings and higher transportation costs has intensified pressure on Ukraine’s public finances.
Roksolana Pidlasa, chair of the parliament’s budget committee, said the country was experiencing its most severe cash shortage since Russia launched its full-scale invasion in 2022.
Falling tax receipts have made it increasingly difficult for the government to meet planned expenditure, despite commitments of financial assistance from international partners.
Ukraine is facing a funding shortfall of just under USD 25 billion for 2026. The government must also secure parliamentary approval by the end of the year for several legislative measures linked to international financial commitments.
The situation could become more challenging in 2027, when the projected funding gap is expected to reach approximately USD 32.6 billion, in addition to around USD 45 billion required for military assistance in kind.
The loss of substantial American budgetary support has added to the financial uncertainty.
According to the US Government Accountability Office, Washington provided approximately USD 50 billion in direct budget assistance to Ukraine between 2022 and 2024 under former President Joe Biden.
The funding helped Kyiv maintain essential public services, including the payment of salaries to teachers and doctors, as well as pensions.
Since President Donald Trump returned to the White House, no significant new budget assistance has been authorised. Some previously approved assistance remains in the pipeline, although certain deliveries have faced temporary pauses, according to the Council on Foreign Relations.
Europe Emerges as Largest Overall Supporter
With American financial assistance becoming less predictable, European countries have assumed a greater role in supporting Ukraine’s economy and defence requirements.
Data from the Kiel Institute for the World Economy indicates that European countries have provided approximately 137 billion euros, equivalent to USD 153 billion, in financial, humanitarian and military assistance since the beginning of the conflict.
The corresponding contribution from the United States stands at approximately 115 billion euros, or USD 129 billion.
Despite this support, Ukraine continues to face considerable uncertainty over its ability to finance government operations and meet future military requirements.
The government has prioritised defence expenditure, public sector salaries, pensions and social welfare programmes while postponing several construction, reconstruction and winter preparation projects.
Pidlasa warned that failure to secure the necessary resources for the following year could threaten the government’s ability to maintain essential public services.
She cautioned that a prolonged funding shortage could affect payments to teachers and doctors and undermine the functioning of hospitals.
The financial challenges underline the extent to which military developments and economic stability have become closely connected in Ukraine.
With major industrial facilities struggling to resume production, agricultural exporters facing restrictions and international assistance requiring continued coordination, Kyiv is confronting a difficult economic outlook.
The country’s ability to restore damaged infrastructure, reopen export corridors and secure predictable external financing will be crucial to preventing further deterioration.
For now, the combination of sustained military attacks, weakening industrial output and growing budgetary pressure continues to place Ukraine’s wartime economy under severe strain.