Ukrainian industry has lost momentum as electricity shortages hit businesses

Industrial production in Ukraine decreased by 0.4% YoY in January–April. This is due to a reduction in economic activity due to a shortage of electricity resulting from the shelling of energy infrastructure, according to the State Statistics Service.

The indicator of industrial production dynamics in April increased by 1.2% compared to April 2025. The extractive industry recorded an annual growth of 4% in April. The processing industry increased output by 1.3% compared to April 2025. In the field of electricity, gas, steam and conditioned air supplies, production decreased by 14% year-on-year.

The key factors of economic contraction in four months include the following:

1. Electricity shortage. As a result of the shelling of the energy infrastructure in January, many industrial enterprises were partially or completely shut down.
2. A cold winter. Low temperatures suspended work at most construction sites, which led to a 4.7% reduction in construction work in January–March.
3. Rising energy costs. Due to the aggravation of the situation in the Persian Gulf, prices for gas and petroleum products in Ukraine have increased significantly. At the same time, the shortage of electricity caused an increase in the price of electricity itself.
4. The impact of CBAM. Ukraine did not receive a postponement or exemption from the cross-border carbon adjustment mechanism (CBAM), which led to the loss of 1.1 million tons of export orders from the EU for metallurgical products and a 7-9% reduction in steel and rolled products production.
5. Limitations of maritime logistics. Due to the shortage of electricity and damage to the port infrastructure as a result of constant shelling, the physical volume of maritime exports has significantly decreased.

Another evidence of the collapse in business activity is the drop in the business activity recovery index. According to the estimates of the Institute for Economic Research and Policy Consultations (IED), this index deteriorated significantly, falling to -0.11 in April (against 0 in February and March). This is the lowest index value since March 2023.