German Defense Minister Boris Pistorius, visiting Kyiv yesterday, said Germany was preparing an additional EUR 1.9bn ($2.2bn) in 2025 military aid for Ukraine on top of the previously approved EUR 7bn. President Volodymyr Zelensky said part of the prospective package, to be approved by the German parliament, would finance joint development and production of long-range weapons including drones and missiles.

Ukraine’s Economy Ministry estimated real GDP growth at 1.1% y-o-y in April (±0.5pp), up from 0.5% in March, bringing the 4M25 tally to +0.9% vs. +0.8% y-o-y in 1Q25. Key contributors to growth included the processing industry—driven by military and reconstruction-related output—alongside domestic trade and stable power supplies. In contrast, the transportation, mining, and agriculture sectors were the main drags. The ministry noted that recent GDP dynamics remain in line with the government’s full-year growth forecast of 2.7% y-o-y.

The volume of natural gas in Ukraine’s storage reservoirs totaled 6.7 bcm as of end-May, up 20% m-o-m but down 27% y-o-y. Gross inflows from abroad stood at 0.5 bcm last month, surging by 87% from April and bringing 5M25 imports to 1.7 bcm (+3.4x y-o-y). Exports of previously stored gas totaled a minor 21 million cubic meters (mcm; -70% m-o-m), reaching 0.3 bcm in 5M25 (-80% y-o-y).

Ukraine exported 3.2 Mt of grain and oilseeds in May, up 13% m-o-m but down 44% y‑o‑y. Grain exports totaled 2.9 Mt, up 20% m-o-m but down 48% y-o-y, while oilseed exports stood at 0.3 Mt, down 28% m-o-m but up 47% y-o-y.

Military aid for Ukraine approved by the previous US administration is continuing to be delivered and there is also an active dialogue with Washington regarding the purchase of American weapons, a Ukrainian Foreign Ministry spokesperson said. He added, without elaborating, that various mechanisms and funding sources are being discussed, including in the framework of the US-Ukraine Reconstruction Investment Fund established under a bilateral minerals deal. A US State Department spokesperson confirmed at a press briefing yesterday that “a number of different negotiations” concerning purchasing US weapons, including air defense, were ongoing.

Ukraine’s headline CPI rose by 1.3% m-o-m in May, accelerating from 0.7% in April and pushing the y-o-y tally to 15.9% from 15.1% a month earlier. Core inflation, which excludes administratively regulated tariffs and prices of raw foods and energy, was up 0.5% m-o-m, in line with April, bringing the y-o-y growth tally to 12.3% from 12.1%.

Monthly salaries paid to staff workers in Ukraine averaged UAH 23,460 in 1Q25, rising by 24% y-o-y on top of +23% y-o-y in 2024. In USD terms, the average nominal salary increased by 12% y-o-y to $553, in line with last year’s expansion.

Daily crude steel production in Ukraine fell 11% m-o-m to 20.5 kt in May following a 30% surge in April. Monthly output totaled 636 kt (-8.1% m-o-m, -14% y-o-y), bringing 5M25 production to 3.1 Mt (-2.5% y-o-y). Finished and semi-finished steel output totaled 525 kt in May (-4.0% m-o-m, -12% y-o-y) and 2.5 Mt in 5M25 (-2.4% y-o-y). Hot metal production stood at 645 kt last month (-2.3% m-o-m, -1.3% y-o-y) and 3.0 Mt in January-May (+5.9% y-o-y).

NBU gross foreign reserves fell by 4.6% m-o-m ($2.1bn) to $44.5bn in May, equivalent to 5.4 months of prospective goods and services imports. The official exchange rate of the hryvnia to the US dollar was flat m-o-m at UAH 41.5:USD, up 1.2% YTD but down 2.5% y-o-y.

Key highlights: Russian forces continued to advance in Sumy and Donetsk regions, probably registering the largest weekly territorial gain in their current offensive phase ongoing since late 2023. Russia conducted several large-scale aerial attacks following Ukraine’s successful strike against Russian air bases, reportedly targeting military and related infrastructure. A planned prisoner exchange, agreed during Ukrainian-Russian talks in Istanbul on Jun. 2, has been delayed to this week, adding to a negative backdrop for further peace negotiations.

The State Statistic Service (SSS) reported real retail turnover growth of 5.1% y-o-y in 1Q25, down from 11.5% in 2024.

The NBU Board left its key policy rate unchanged at 15.5% at a meeting yesterday, in line with the Bank’s earlier forward guidance. The NBU noted that headline inflation likely peaked in May, accelerating from 15.1% y-o-y in April and slightly exceeding the Bank’s latest forecast. At the same time, core inflation likely resumed its upward trend (vs. 12.1% y-o-y in April) but remained close to the Bank’s expectations. These dynamics, alongside stable inflation expectations, underpinned the decision to keep the key rate on hold.

The average base load day-ahead (DAHD) electricity price rose to UAH 4,421/MWh in May, up 3.8% m-o-m and 12% y-o-y (EUR 94/MWh, +2.8% m-o-m and y-o-y). June baseload supplies are currently priced at UAH 4,449/MWh, up 14% m-o-m but down 19% y-o-y.

Ukraine’s headline current account (C/A) deficit widened to $1.1bn in April from $0.9bn in March, bringing the YTD total to $6.8bn vs. $5.3bn in 4M24. The financial and capital account (F/A) surplus rose to $4.8bn from $3.0bn in March, totaling $8.7bn YTD. As a result, the total balance stood at +$3.7bn in April and +$1.9bn for 4M25, broadly in line with +$1.8bn in 4M24.

President Volodymyr Zelensky said yesterday Russia’s proposals for a ceasefire and peace agreement with Ukraine presented at the latest round of Ukrainian-Russian talks in Istanbul on Jun. 2 amounted to an “ultimatum.” He in particular rejected Russian demands for Ukraine’s neutrality and annexation of Crimea and four other partially occupied Ukrainian regions. “I consider it pointless to continue diplomatic meetings in Istanbul that do not resolve anything,” Zelensky said.

According to preliminary Finance Ministry data, the central budget’s cash-based deficit widened to UAH 142bn ($3.4bn) in May from UAH 50bn ($1.2bn) in April, bringing the 5M25 cash gap to UAH 429bn ($10.3bn), compared to $12.0bn in 5M24.