Ukraine’s headline current account (CA) deficit narrowed to $0.6bn in January from $1.4bn in December and $2.8bn in January 2025. The financial and capital account (FA) posted a $0.2bn deficit, reversing from a $3.5bn surplus in December and a $1.8bn surplus a year earlier. As a result, the overall balance stood at -$0.9bn, compared with +$2.1bn in December.

The average baseload day-ahead (DAHD) electricity price reached UAH 9,786/MWh (EUR 192/MWh) in February, up 17% m-o-m and 42% y-o-y. The 2M26 average stood at UAH 9,019/MWh (EUR 178/MWh), marking a 57% y-o-y increase.

The Ukrainian National Bank’s survey-based index of business activity, a PMI-type gauge, stood at 45.9 on a 0-100 scale in February, up 4.6pt m-o-m but down 1.0pt y-o-y.

Cargo transportation in Ukraine totaled 24.8 Mt in January, down 11% m-o-m and 3.6% y-o-y. Rail freight fell by 13% m-o-m and 21% y-o-y to 11.1 Mt, representing 45% of total turnover, while motorway transportation stood at 9.7 Mt, down 16% m-o-m but up 17% y-o-y. Total freight turnover (distance-adjusted) dropped by 7.8% m-o-m and 18% y-o-y. On a related note, passenger transportation turnover surged 19% m-o-m and 20% y-o-y in January.

S&P Global Ratings upgraded its long-term issuer credit rating of MHP by one notch to CCC+ from CCC after the company redeemed its $550m 2026 Eurobonds using proceeds from the new $550m 2029 issue, substantially reducing short-term refinancing risks. The agency assigned the new 2029 notes a long-term rating of CCC+. At the same time, S&P cautioned that longer-term refinancing risk remains elevated, particularly given the sizable 2029 maturities, when both the $550m and $350m notes fall due.

• Russian advances remained marginal for yet another week despite a high intensity of ground assaults, with February gains being the lowest in almost a year. • Ukrainian counterattacks in the Zaporizhya and Dnipropetrovsk regions reportedly made further progress. • However, Russian forces keep making tactical gains on the approaches to key Ukrainian-controlled cities in the Donetsk region. • Ukraine’s interceptions of Russian drones and missiles improved in February despite intensified strikes.

Below we offer our initial assessment of potential implications for Ukraine from the US and Israel’s unfolding aerial strike campaign against Iran. In broad terms, any destabilization in the Middle East, especially a prolonged one, seems more negative than positive for Ukraine in its current situation of war with Russia. The key implications are that resulting oil price growth benefits Russia and that accelerated expenditure of ammunition by the US and potentially its European allies in a protracted conflict risks depriving Ukraine of vital military aid, especially air defense missiles. Also, given the region’s geopolitical significance, heightened tensions there may overshadow the war in Ukraine and delay the ongoing US-brokered peace process. At the same time, macroeconomic implications are likely to be muted.

Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter listed on the Warsaw Stock Exchange, reported its 2Q26FY results (calendar 4Q25). Sales rose by 33% q-o-q to $1.1bn (-4.4% y-o-y), while EBITDA declined by 28% q-o-q to $103m (-13% y-o-y).

Ukrainian and US delegations met yesterday in Geneva to finalize preparations for the next round of trilateral talks with Russia and discuss bilateral economic cooperation. President Volodymyr Zelensky said he expected the next round of peace talks to be held in Abu Dhabi in early March and focus on security guarantees for Ukraine and preparations for a meeting at the leaders’ level. “This is exactly the format that can resolve many issues,” Zelensky said. A day earlier, following a call with US President Donald Trump, Zelensky said the next US-Ukrainian-Russian meeting could set the stage for the three countries’ leaders to meet, and “President Trump supports this sequence of steps.”

The IMF Board has approved a new $8.1bn (SDR 5.9bn) four-year Extended Fund Facility (EFF) for Ukraine as part of a broader $136.5bn international support package, with immediate disbursement of a first tranche of $1.5bn. The new program replaces the $15bn EFF approved in 2023, which was terminated as it could not accommodate a longer war scenario. In line with the IMF’s policy for lending in a high-uncertainty environment, the program is underpinned by two macroeconomic scenarios — baseline and downside. The revised baseline assumes the war winds down by end-2026 (vs. end-2025 in the previous EFF). Real GDP growth is projected at 1.8-2.5% y-o-y in 2026, down from 4.5% forecast before, reflecting damage to power infrastructure but assuming relatively swift repairs. Growth is expected to accelerate to 3.5% in 2027 and 4.0% per year in 2028-29, supported by refugee returns, the start of reconstruction, and a recovery in private investment. Under this trajectory, GDP is projected to return to its pre-war level in 2032, one year later than in the last review of the previous program, reflecting a longer war assumption, lower expected refugee returns, and a slower inflow of reconstruction-related investment. Among other macro assumptions, the IMF projects the general government deficit (net of grants) at 19% of GDP in 2026, up from the previously expected 10%, but below 24% in 2025. The deficit is projected to narrow to 18% in 2027, 11% in 2028, and 4-6% thereafter. External official financing is assumed at $52bn in 2026, largely from the EU ($27bn) under the existing Ukraine Facility and the EUR 90bn Ukraine Support Loan, followed by $43bn in 2027 and $22bn in 2028. These inflows are expected to lift NBU reserves to $66bn in 2026 and further to $73bn and $75bn in 2027-28. Inflation is projected at 7.5% y-o-y (end-period) in 2026, with mild disinflation to 7.0% in 2027. The downside scenario assumes the war continues through 2026-27, with a larger impact in 2026 than under the baseline and a gradual transition to a frozen conflict by end-2028. Under this scenario, the IMF projects real GDP growth of 1.5% in 2026, 1.0% in 2027, and 0.5% in 2028, with output returning to its pre-war level only in 2034. The new program envisages nine reviews, starting in May 2026 (with a $0.7bn tranche), based on end-March structural benchmarks. These include adoption of a tax package for 2026-27 covering taxation of income earned via digital platforms, closure of loopholes in the taxation of individual parcel imports, preservation of the 5% military levy after the termination of martial law, and the introduction of VAT for entrepreneurs under the simplified tax regime once annual turnover exceeds UAH 4m.

According to the State Statistical Service (SSS), retail turnover rose by 13.4% y-o-y in real terms in January, slowing from 16.5% in December as seasonally adjusted turnover fell by 2.4% m-o-m following +3.5% in December.

Damage inflicted by Russia’s invasion on Ukraine totaled $195bn as of end-2025, up $19bn from $176bn a year earlier, according to the fifth round of the Rapid Damage and Needs Assessment (RDNA 5) — a joint study by the World Bank, the European Commission, the Ukrainian government, and the United Nations. The new study estimated Ukraine’s recovery and reconstruction needs over the next 10 years at $588bn, up $64bn from $524bn a year earlier, noting that around $20bn of these needs have already been met through emergency repairs and early recovery efforts. These were concentrated mainly in housing ($6.2bn), commerce and industry ($5.5bn), education ($2.4bn), transport ($2.1bn), and agriculture ($1.5bn), with funding sourced from the state budget and the private sector. Total economic losses were estimated at $667bn, up from $589bn previously. RDNA 5 identified $15.3bn in priority recovery and reconstruction priorities for 2026, of which $5.8bn has already been secured and $9.5bn needs to be sourced. This year’s priorities are concentrated in the energy and mining sector ($4.9bn), transport ($2.7bn), housing ($2.6bn), and social protection and livelihoods ($1.6bn).

The Ministry of Finance placed UAH 41bn ($1.0bn) of hryvnia-denominated bonds and $0.3bn worth of FX bonds at primary auctions in February. It also conducted a switch auction, swapping UAH 10bn ($235m) of benchmark bonds due March 2026 for a new benchmark issue maturing in October 2029. With UAH 28bn ($0.7bn) of UAH bonds (including the swapped bonds) and $0.5bn of FX bonds redeemed, monthly net proceeds totaled $0.5bn, in line with January and bringing the YTD net placement volume to $1.0bn. The rollover rate stood at 141% in 2M26, including 160% on UAH bonds and 69% on FX bonds.

The European Union is working on a new EUR 920m ($1.1bn) support package to help Ukraine prepare for the 2026/27 winter, President of European Commission Ursula von der Leyen announced yesterday during a visit to Kyiv marking the fourth anniversary of Russia’s full-scale invasion The package is aimed at expanding power supply through decentralized renewable generation and accelerating repairs to damaged energy assets, including combined heat and power (CHP) plants and the electricity grid.

Metinvest reported 4Q25 iron ore production of 4.0 Mt, flat q-o-q but up 14% y-o-y, bringing full-year output to 15.7 Mt (+0.2% y-o-y). Crude steel production rose by 3.3% q-o-q to 564 kt in 4Q25, while full-year output declined by 3.9% y-o-y to 2.0 Mt. Finished and semi-finished steel production increased by 3.0% q-o-q and 23% y-o-y to 884 kt in the quarter, lifting 2025 output to 3.3 Mt (+8.2% y-o-y). Coke production totaled 279 kt in 4Q25 (-2.8% q-o-q, +1.1% y-o-y) and 1.1 Mt for the year (-2.0% y-o-y). Metinvest ceased reporting coking coal production following the shutdown of its Donetsk region-based Pokrovske Coal due to military hostilities and the deconsolidation of its US coal subsidiary United Coal Company, which is in the final stage of divestment.

Ferrexpo announced that the regional first-instance court of in the city of Poltava has opened bankruptcy proceedings against its subsidiary Ferrexpo Poltava Mine (FPM) in connection with a UAH 4.7bn ($110m) surety claim filed by Maxi Capital Group. The court appointed an insolvency manager.