Russia is escalating its war of aggression against Ukraine on another level: it is trying to paralyze the economy. Russian missiles and drones hit steel mills, shopping centers, factories and suppliers to supermarkets. It goes against pharmaceutical manufacturers, postal and logistics, data and telecommunications nodes, railways, ports on the Black Sea.
"Russia wants to kill our economy and thereby break our resistance," says Ukrainian President Volodymyr Zelensky. Economics Minister Olexander Kravchenko estimates the damage to fixed assets this year alone to be ten billion US dollars (8.9 billion euros). Every hour of an air alert costs Ukraine around 40 million euros, he told the Guardian newspaper: "When the people are in the bunker, the economy stops." There are growing concerns about how long Ukraine can withstand this pressure. Questions and answers about this:
Why is Russia intensifying economic war?
“Because it can,” says Hlib Vyshlinskyi, director of the Center for Economic Strategies think tank in Kiev. There is a debate as to whether increased Ukrainian attacks on the Russian oil industry or the online retailer Wildberries have provoked Russia, he says. "But we didn't start this war."
In his opinion, Moscow is reacting more to the fact that it is not making any progress in the fighting on the ground. "No new terrain is being conquered." And Russia currently has a military advantage with fast jet drones. Moscow is using the time until Ukraine develops its defenses. Russian leader Vladimir Putin has repeatedly threatened to intensify attacks - most recently after Ukrainian drones hit a refinery in Moscow on the day of the parliamentary election in September.
Which sectors in Ukraine are particularly affected?
Steel: There is no steel industry anymore, said Olexander Wodowis from the management of the steel group Metinvest to the “Financial Times” in September. Metal has always been an important export good for Ukraine. The blockade of the ports on the Black Sea already stopped exports. Since August, Russian missiles have destroyed the remaining steel plants of Metinvest in Zaporizhia and ArcelorMittal in Kryvyi Rih. Many workers died. Tens of thousands of jobs depended on these plants.
Agriculture: Agriculture is a strength of Ukraine, and harvests of wheat, corn and sunflowers were good this summer. Because of the attacks on the ports on the Black Sea and the Danube, exports are only running at half speed, says Agriculture Minister Taras Vysotskyj. The other half of the harvest is stuck in farms. If you can't sell now, you won't earn any money for winter sowing and the coming production cycles, explains expert Vyschlinskyj.
Transport and logistics: The Ukrzalisnytsya state railway has held Ukraine together since the start of the war in 2022. But now Russian attacks on trains are disrupting timetables and finances. Ukraine is trying to find 500 locomotives. "But the bigger problem is that there is probably no freight for these locomotives," says Vyshlinsky. The transport of metal and grain to the Black Sea ceased. Russia is also trying to isolate Ukraine with attacks on the border crossings to Poland, Romania and Moldova.
Are the Russian attacks also affecting German investments?
Twelve German companies reported damage to buildings, systems and goods in a survey by the German-Ukrainian Chamber of Industry and Commerce. They estimated the direct damage at 35.6 million euros, and further losses at 62.3 million euros. However, the chamber's managing director, Rainer Perau, assumes that there are more cases. “There is a high number of unreported companies that are affected,” he said.
German companies do not talk publicly about the damage, especially not the company headquarters in Germany. The Russian army should remain in the dark about its hits. When asked by an affected company, they did not want to "give rise to further attacks" by providing information about the extent of the damage and the possibility of repairs.
What does the economic war mean for the national budget?
The economic war has not yet caused any supply shortages for the people of Ukraine, but life is becoming more dangerous, complicated and expensive. Visiting the shopping center or hardware store becomes a risk because drones can strike there. The National Bank currently sees inflation at 8.1 percent. The growth forecast has been reduced to 1.3 percent. After a slump at the start of the war, the economy grew by 12.3 percent in 2025.
Now the Ukrainian state, which is supposed to protect its population socially and wage an expensive war, is threatened with losing its tax revenue because of the war damage. For 2027, Wyschlinskyj expects a minus of ten percent in the worst case.
There is already a budget gap until the end of 2026. Zelensky initially spoke of the equivalent of 23 billion euros, but according to Economics Minister Kravchenko it is more like 17.6 billion euros. Kyiv hopes for further financial support from the Europeans.
Can the Ukrainian economy collapse under the pressure?
"When you look to the East, I'm overwhelmed that companies still work there given the dangers," says Ukrainian business ombudsman Anka Feldhusen. But the point has been reached that the Russian attacks are shaking the basic structure of the Ukrainian economy, says the former German ambassador in Kiev.
Economist Vyshlinskyj does not expect a collapse - provided that foreign partners continue to help Ukraine. "If this balance remains, there will be no collapse." He expects zero growth for 2026. The answer to the economic problems lies in the military sector: Ukraine needs more air defense. AHK managing director Perau says something similar: "The fate of the economy will depend, among other things, on whether it is possible to develop interception options for the Russian jet drones."
