Ukraine is preparing for a particularly harsh winter, as new Russian attacks on vital infrastructure and export routes are exacerbating an already severe budget shortfall, Ukrainian officials warned at a conference in Kyiv.
Economy Minister Oleksandr Kravchenko estimated that Russian airstrikes have caused approximately $10 billion in damage to infrastructure and fixed assets this year. When larger economic impacts—such as disruptions from the de facto blockade of Black Sea ports—are taken into account, the losses amount to approximately 1.5 percentage points of GDP. Kravchenko told investors, diplomats, and officials that the devastation is draining both the country's physical capacity and its limited financial space, just as temperatures are dropping.
With front lines largely static after more than four and a half years of fighting, both sides have focused on attacking logistical and economic targets to degrade each other's wartime capabilities. In recent weeks, Moscow has intensified near-constant attacks on Kyiv using high-speed jet-powered drones, causing widespread disruption to daily life, business operations, and government services. Russian forces have also stepped up attacks in the southern regions, impacting Ukraine's Black Sea ports and threatening the country's ability to ship its main exports—grain and iron and steel products.
Kravchenko warned that the maritime blockade could jeopardize approximately $40 billion in export revenue. Ukraine's economy relies heavily on the Black Sea gateways for the transport of agricultural and metal goods; when these routes are restricted or closed, export volumes and foreign currency earnings fall sharply, impacting employment, industrial activity, and state income.
The intensified campaign has begun to put pressure on the state budget. Roksolana Pidlasa, head of the parliamentary budget committee, said domestic revenues fell by $1.35 billion in the first eight months of the year, a significant portion of which occurred in August alone. This decline in taxes and other domestic income complicates Kyiv's ability to meet its war needs and maintain public services.
Ukraine spent approximately $42 billion on defense in the first eight months of the year, excluding military aid from partners. However, domestic revenue generation and local borrowing generated only approximately $39 billion during the same period, leaving a gap that Kyiv has consistently failed to fill from internal sources. Pidlasa said the direct costs of the war have risen to approximately $190 million per day this year, up from $140 million in 2024. This increase is due to inflation, the deployment of a larger army, increased use of ammunition, and increased social payments to the families of fallen soldiers.
Given these pressures, the government is exploring ways to reduce or defer non-military spending and pressuring Western allies for more rapid and substantial financial assistance. However, officials acknowledge that discussions with partners have yet to yield any quick or clear solutions. Rising defense spending, declining export revenues, and repeated infrastructure damage mean Kyiv must balance immediate military needs with the risk of long-term economic decline.
The repeated attacks have also had a significant human cost. While both Russian and Ukrainian officials deny intentionally targeting civilians, intense drone and missile attacks have disrupted daily life in Kyiv and other areas, disrupting electricity, transport, and basic services. Damage to vital infrastructure—transport hubs, energy infrastructure, and industrial sites—increases both immediate humanitarian needs and long-term reconstruction demands, which will require ongoing funding.
Analysts say that as the war progresses, targeting economic centers—ports, rail links, power plants, and factories—has become a strategic tool to weaken the enemy's resolve. For Ukraine, the challenge is enormous: maintaining defense operations and social responsibilities while preventing a decline in industrial output and export revenues, which form the basis of the national budget.
Kyiv's leaders face difficult decisions for the rest of the year: reallocate scarce funds to cover defense gaps, borrow more, tighten civilian programs, or hope for a swift disbursement of Western financial aid. With winter approaching and the threat of new attacks on vital infrastructure, Ukrainian officials warn that if more resources are not quickly mobilized, economic hardship could worsen, exacerbating the hardships of ordinary people already struggling through the protracted conflict.
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