Ukraine’s real GDP declined by 0.6% y-o-y in 1Q26, according to revised data, 0.1pp worse than the flash estimate. Seasonally adjusted real GDP fell by 0.7% q-o-q (non-annualized), following a 0.7% increase in 4Q25. Nominal GDP stood at UAH 2,047bn in 1Q26, up 6.5% y-o-y, as the GDP deflator slowed to 7.0% y-o-y from 11% in 4Q25. As a result, 12-month trailing nominal GDP totaled an estimated UAH 9,014bn ($214bn), broadly in line with 2025.

Ukraine’s Verkhovna Rada passed amendments to the 2026 budget incorporating EUR 45bn financing under the EU’s EUR 90bn Ukraine Support Loan (USL), including EUR 28bn under the defense component and EUR 17bn for budget support, as well as smaller amounts of external financing under other programs and additional income tax revenues. The amendments raise the headline budget revenue target by UAH 2,291bn (EUR 46bn) to UAH 5,196bn, equivalent to EUR 105bn or $114bn (at the budgeted average exchange rates of UAH 49.4:EUR and UAH 45.7:USD). Headline expenditures are projected to increase by UAH 1,640bn (EUR 33bn) to UAH 6,447bn, equivalent to EUR 130bn or $141bn. This implies a headline budget deficit target of $27bn, or 12.1% of GDP, down from 18.5% envisaged in the original budget law.

State-owned Ukreximbank booked net income of $28m (UAH 1.2bn) in 1Q26, down 39% q-o-q. Total assets declined by 9.6% q-o-q to $6.6bn, while customer deposits dropped by 12% q-o-q to $5.4bn. NIM, based on net interest-bearing assets and in UAH terms, inched up by 0.2pp q-o-q to 4.2%. The bank booked a capital adequacy ratio of 17.5% as of end-1Q26, up 0.6pp q-o-q and 5.6pp y-o-y.

Headline inflation in Ukraine slowed to 8.2% y-o-y in May from 8.6% in April, as m-o-m inflation decelerated to 0.9% from 1.4% in April. Core inflation, which excludes administratively regulated tariffs and prices for raw foods and energy, accelerated to 7.9% y-o-y from 7.6% in April, despite slowing to 0.7% m-o-m from 0.9%.

Naftogaz reached an agreement in principle on the key restructuring terms for its EUR 695m Eurobonds maturing in July 2026 and $584m bond due in 2028 with an ad hoc group of bondholders representing approximately 40% of the two series. The proposal envisages amortization of the 2026 Eurobond principal over 2027-2032 and that of the 2028 Eurobond over 2030-2033. For the 2026 Eurobond, 80% of coupon accrued between Jul. 19, 2024 and the transaction date will be paid in cash on the transaction date, while the remaining 20% will be capitalized together with any coupon outstanding on the transaction date. For the 2028 bond, coupon accrued since May 8, 2026 will be fully capitalized. The coupon rate on both bonds will increase to 8.95% (from 7.125% on the 2026 notes and 7.625% on the 2028 notes) and will be split between cash and PIK components (see table below for details). The proposal also includes a 1.0% consent fee for holders of the 2026 bonds and a 0.5% fee for holders of the 2028 bonds. The covenants for both bonds will be relaxed to allow additional borrowing from IFIs regardless of the company’s consolidated leverage ratio. Dividend payments will be prohibited until the Eurobonds are fully repaid, unless required by law. The company will also be required to maintain a rating on the restructured bonds from at least one rating agency.

DTEK Oil & Gas (DTEKOG) reported 2025 net sales of $301m (-26% y-o-y), and EBITDA of $179m (-25%), implying an EBITDA margin of 59% (-0.7pp y-o-y).

The government presented its 2027–29 macroeconomic and social development forecast in two scenarios. Under the negative scenario, the government expects real GDP growth to remain moderate at 1.3% y-o-y in 2027, but to accelerate to 4.1% in 2028 and 5.0% in 2029. Inflation is projected at 8.0% y-o-y e-o-p in 2027–28, before slowing to 5.9% by end-2029. The goods and services trade deficit is expected to stay large and broadly stable throughout the forecast horizon, at around $80bn. Under the positive scenario, real GDP growth is projected to accelerate to 4.5% y-o-y in 2027, 5.3% in 2028 and 6.7% in 2029. Inflation is expected to ease gradually, from 8.9% y-o-y at end-2027 to 6.9% at end-2028 and 5.1% at end-2029. The trade deficit is expected to narrow remain elevated, at $71bn in 2027 and $74bn in both 2028 and 2029, as an export recovery is projected to be broadly offset by a comparable increase in imports. Economy Minister Oleksiy Sobolev said the two scenarios differ in their assumptions regarding the duration of the war, without providing further details. According to him, the government expects around 2 million refugees to return after the war, increasing employment to 13.4 million by 2029 from 12.9 million in 2027 under the positive scenario, and to 13.2 million from 12.8 million under the negative scenario.

The Ukrainian government is considering an increase in railway freight tariffs as one of the measures to stabilize the financial position of Ukrainian Railways, “along with additional support from international partners and financial institutions,” the Regional Development Ministry said in a statement. On a related note, Finance Minister Serhiy Marchenko said that the government’s recently approved PSO-type support mechanism could facilitate additional financing from EBRD for the company. In related news, Ukrainian Railways CEO Oleksandr Pertsovskyi said the company needs to raise freight tariffs by at least 45% this year to stabilize its finances, complete its Eurobond restructuring, and restore access to new borrowing.

The EU Council approved new steel market safeguard measures effective July 1, cutting tariff-free quotas to 18.3 Mt per year, down 47% from existing tariff quotas, and doubling the out-of-quota duty to 50%. The preamble to the document said that, when allocating quotas, the European Commission must take into account the interests of Ukraine as a candidate country for EU membership that faces immediate security threats. At the same time, this should not undermine the effectiveness of the regulation itself. Prior to the decision, Estonia, Latvia, and Lithuania stated that Ukraine should be completely exempted from these restrictions, meaning that neither quotas nor tariffs should be applied, as had been provided for in previous EU safeguard measures. Sweden, Finland, and Denmark separately emphasized that Ukraine’s difficult situation should be duly considered when allocating tariff quotas.

Ukraine exported 3.9 Mt of grain and oilseed crops in May, the eleventh month of marketing year 2025/26 (July-June), down 8.2% m-o-m but up 22% y-o-y, bringing 5M26 exports to 19.6 Mt, up 10% y-o-y. Grain exports dropped by 12% m-o-m to 3.6 Mt in May (+23% y-o-y), while oilseed exports surged by 65% m-o-m to 0.3 Mt (+6.4% y-o-y).

• Russian gains remain marginal and reported losses very high, especially last week, though advances in the first week of June increased. • Russia’s offensive pressure throughout the Donetsk region, its primary offensive axis, remains very strong, suggesting that Ukraine’s ongoing wave on strikes on Russian logistics in the occupied regions and other defensive countermeasures need to expand more to halt Russian advances.

Russian President Vladimir Putin on Friday rejected President Volodymyr Zelensky’s proposal for a direct meeting, saying he saw no point in such talks at present and could meet only after a long-term settlement was agreed at a lower level. Putin called Zelensky’s letter to him “rude” and reiterated that Russia’s war aims remain unchanged from those he outlined in June 2024, including Ukraine’s withdrawal from four partially occupied regions, recognition of Russian sovereignty over annexed territories, and abandonment of NATO aspirations along with “demilitarization” and “denazification”. Separately, Politico reported on Friday that NATO members are discussing “a new EUR 70bn military funding commitment for Ukraine”, proposed by Germany ahead of the July 7-8 NATO summit.

NBU gross foreign reserves fell by 5.2% ($2.5bn) m-o-m in May, to $45.7bn, bringing the YTD decline to 20% ($11.6bn). End-May reserves were equivalent to 4.7 months of prospective goods and services imports. The hryvnia depreciated against the USD by another 0.4% m-o-m in May, following declines of 0.6% in April and 1.3% in March, to UAH 44.3 (official rate). The currency continued weakening gradually in June, slipping by a further 0.2% MTD and 4.4% YTD.

The IMF has agreed to move until end-July the deadline for Ukraine to approve legislative changes abolishing the VAT exemption for private postal shipments from abroad valued below EUR 150, while emphasizing that no further concessions will be made, local media outlet RBC-Ukraine reported on Friday, citing sources familiar with the negotiations. The report also said that legislation introducing taxation of income earned through digital platforms is expected to be adopted this week, enabling the IMF and Ukrainian authorities to reach a staff-level agreement on the first review of the $8.1bn EFF program. On a related note, the IMF reportedly will not object to a further extension of the 50% windfall tax on banks to profits earned in 2027.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, reported that its export terminal in the port of Chornomorsk was damaged in three Russian drone attacks since June 4, resulting in temporary disruptions to terminal operations. The company is currently assessing the extent of the damage and related losses.