The National Bank’s survey-based index of business activity, a PMI-type gauge, stood at 49.2 on a 0-100 scale in December, down 0.3pt m-o-m but up 3.3pt y-o-y.

US President Donald Trump’s envoy Steve Witkoff reported positive meetings in Paris yesterday with the Ukrainian leadership and the Coalition of the Willing, mostly comprising Ukraine’s European allies, to advance work on security guarantees and a post-war economic recovery plan for Ukraine. Witkoff said talks on the security commitments were “largely finished” and the US agreed with the Coalition that “durable security guarantees and robust prosperity commitments are essential to a lasting peace in Ukraine.” He added that talks with the Ukrainian delegation will continue today.

The Ukrainian Finance Ministry placed UAH 430bn ($10bn) of hryvnia-denominated bonds and $3.3bn of FX-denominated paper in gross terms at primary auctions in 2025. With UAH 334bn ($8.0bn) of UAH bonds and $3.7bn of FX bonds redeemed, full-year net proceeds amounted to $1.9bn, down from $5.9bn in 2024, $5.5bn in 2023, and $6.0bn targeted by the 2025 budget law.

According to a Nov. 26-Dec. 29 survey by the Kyiv International Institute of Sociology (KIIS), the share of respondents agreeing that Ukraine could accept a loss of territory to facilitate a peace deal with Russia shrank to 33% toward end-2025 from 38-39% earlier in the year. Any surrender of territory was unacceptable to 53%, little-changed from earlier in 2025.

Ukraine’s State Statistical Service (SSS) reported that the decline in industrial production (IP) widened to -6.3% y-o-y in November from -4.6% in October, bringing the YTD contraction to -2.4% y-o-y after -2.2% in 10M25. Meanwhile, construction activity rebounded to +6.7% y-o-y in November following -10% in October, keeping the YTD increase at +12%. Retail turnover growth accelerated to 14% y-o-y from 10% in October, lifting the YTD tally to +7.2% after +6.5% in 10M25. Finally, agricultural production surged by 82% y-o-y in November after -4.6% in October, narrowing the YTD decline to -6.6% from -12% in 10M25.

Ukraine’s headline current account (CA) deficit widened to $3.5bn in November from $2.1bn in October, bringing the 11M25 gap to $31bn vs. $15bn in 11M24. The financial and capital account (FA) surplus, including IMF funds, increased to $8.5bn from $5.1bn in October and $3.4bn in September, lifting the 11M25 surplus to $40bn from $14bn a year earlier. As a result, the overall balance of payments surplus rose to $5.1bn from $3.0bn in October and reached $9.3bn in 11M25, reversing from -$1.1bn in 11M24.

Key highlights: ·   Russian forces made new tactical advances throughout the front during the holiday period, focusing on Donetsk and Zaporizhya regions. Ukrainian forces solidified gains in Kharkiv region. ·   The Russian army captured 4,500 km2 or 0.7% of Ukraine’s territory in 2025 — less than the remaining Ukrainian-controlled area in Donetsk region which Russia demands surrendered. ·   Russia intensified attacks on Ukrainian sea and river ports in Odesa region in late December, damaging Kernel Holding’s facility.

National security advisers from over a dozen European countries and Canada visited Kyiv on Saturday to hold talks with President Volodymyr Zelensky and top government officials, including from the economic sector, as part of ongoing talks involving the US on developing security guarantees for Ukraine and a broader peace framework.

The Ukrainian Finance Ministry reported gross foreign budget support of $52.4bn in 2025, up from $42bn in each of 2023-24 and $32bn in 2022. Separately, Defense Minister Denys Shmygal said Ukraine secured $45bn of military aid last year, almost 30% higher than in 2024, including $10bn from the US and $35bn from the EU, Canada, Australia, and other donors.

President Volodymyr Zelensky announced a large-scale reshuffle across the government, security services and his office over the weekend, pledging to overhaul the entire defense, security and law enforcement leadership except the commander-in-chief of the armed forces.

Fitch upgraded its Long-Term Foreign Currency (LTFC) rating on Ukraine to CCC from RD following the completion of the restructuring of $2.6bn of GDP warrants, which normalized relations with the substantial majority of Ukraine’s external commercial creditors. Including the sovereign Eurobond restructuring completed in August 2024, Fitch estimates that Ukraine has restructured 94% of its commercial public debt. Fitch assigned a CCC+ rating to the $3.5bn of new sovereign Eurobonds issued in exchange for GDP warrants (C-bonds) and affirmed the ratings on the A- and B-series bonds at CCC, with the one-notch uplift for the C-bonds reflecting their enhanced credit and voting protections. Fitch said it could downgrade Ukraine’s rating if lower international financial support or further intensification of the war increases the probability of another debt restructuring or default. Conversely, a sustained reduction in security risks could lead to further upgrades.

DTEK Group CEO Maksym Tymchenko said in a Bloomberg interview that DTEK Energy’s power plants have been attacked six times since Russia resumed strikes on Ukraine’s critical infrastructure in October, with around half of the company’s available capacity damaged or destroyed. He added that the recent attacks have been broad in scope, simultaneously targeting power generation, transmission, distribution, coal mining, and gas production. Repair efforts are becoming increasingly difficult as stocks of pre-existing equipment have largely been exhausted, forcing DTEK to actively source used equipment abroad.

The European Council agreed to provide a EUR 90bn ($105bn) loan to Ukraine to cover the country’s 2026-27 external funding needs. The funds are expected to be borrowed by the EU on capital markets and backed by headroom in the EU budget (untapped spending in the bloc’s shared budget), with the Czech Republic, Hungary and Slovakia waived from providing guarantees. Ukraine will be required to repay this loan only if it receives reparations from Russia. Until then, Russian assets in the EU will remain immobilized, with the EU reserving “its right to make use of them to repay the loan.” Loan tranches are expected to be conditioned, among other things, on Ukraine's continued upholding of the rule of law, including fight against corruption. According to German Chancellor Friedrich Merz, the money will be provided to Ukraine at zero interest.

The Ukrainian government announced yesterday that 99% of investors holding its GDP warrants supported the proposed restructuring of the instrument, above the required 75% threshold. Following the vote, Ukraine will issue $3.497bn of new C-series sovereign bonds amortizing over 2030-32, as well as a small amount ($34m) of existing B-series bonds. The government will also pay an estimated $185m consent fee to warrant holders and cancel $0.604bn of warrants previously repurchased from the market.

The stock of gross hryvnia-denominated loans issued by Ukrainian banks rose by 2.5% m-o-m to UAH 1,040bn in November, accelerating from +1.7% in October and +0.9% in September, lifting YTD growth to 25% vs. 17% in 11M24. FX-denominated loans increased by 2.3% m-o-m to $7.1bn, slowing from +4.0% in October and bringing YTD growth to 12.6% after a 5.5% decline in 11M24. Hryvnia deposits grew by 2.2% m-o-m to UAH 2,049bn, broadly in line with October’s +2.1%, with YTD growth at a moderate 8.8% (vs. 7.1% in 11M24). FX deposits fell by 2.5% m-o-m to $20.4bn, slowing YTD growth to 1.8% (vs. 3.1% in 11M24).

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, attracted a $77m loan from state-owned Oschadbank to cover its working capital needs. Part of the loan (up to $36.7m over seven years) can also fund CAPEX, including renewal of Kernel’s agricultural machinery fleet and reconstruction of its grain terminal in the port of Chornomorsk. (Oschadbank)