# OPEN LETTER: To a Contracting Ukraine — Your Economy Resists, Even as It Retreats

> Ukraine, in the first quarter of 2026, your GDP contracted by 0.6% year over year. This is the sharpest contraction since the wartime recovery began, according to the National Bank of Ukraine. The reasons are documented and specific: Russian strikes on thermal power plants caused energy production to fall by 15.2%; transportation dropped by 9.4%; construction by 4.5%. The IMF r

- Author: Maxime Marquette
- Publisher: MadMax (https://mad-max.co)
- Section: Open letter
- Published: 2026-06-29
- Canonical URL: https://mad-max.co/en/article/lettre-ouverte-a-l-ukraine-qui-contracte-votre-economie-resiste-meme-en-reculant

## Introduction: A Letter Written With the Respect Owed to Truth

### The GDP contracting by 0.6% — what do the numbers tell us?

**Ukraine**, in the first quarter of **2026**, your **GDP** contracted by **0.6%** year over year. This is the **sharpest contraction since the wartime recovery began**, according to the **National Bank of Ukraine**. The reasons are documented and specific: Russian strikes on **thermal power plants** caused energy production to fall by **15.2%**; **transportation** dropped by **9.4%**; **construction** by **4.5%**. The **IMF** revised its growth forecast for **2026** downward, to between **1%** and **1.6%**. These figures are real, verifiable and concerning. I will not lie to you about that.

I am writing you this open letter because the way we interpret these numbers matters just as much as the numbers themselves. **Moscow** will read this statistic as a victory. Its analysts will say: "Look, the Ukrainian economy is collapsing, resistance is futile." That narrative is both statistically debatable and strategically misleading. I want to give you the tools to contest it.

### What a 0.6% contraction really means in this context

In **2022**, during the first year of the full-scale invasion, the Ukrainian economy contracted by **29%**. Twenty-nine percent. That was an economic catastrophe without peacetime precedent. Since then, **Ukraine** experienced several quarters of positive growth — a "wartime recovery" fueled by international aid, the resilience of the agricultural sector and the development of the domestic defense industry. A contraction of **0.6%** in this context is not the collapse **Moscow** announces. It is a sectoral disruption directly linked to Russian strikes on specific infrastructure.

*I want to be direct with you, Ukraine: this 0.6% contraction is the calculated result of a deliberate Russian strategy. Moscow is targeting your thermal power plants precisely to break your economy and discourage your resistance. The fact that your recession is limited to 0.6% after months of massive strikes on your energy infrastructure is, in reality, testimony to your remarkable resilience. I say that with all the sincerity I can muster.*

## Russian Energy Sabotage as an Economic Strategy

### Thermal power plants and energy infrastructure: deliberate targets

The **15.2%** drop in Ukrainian energy production in the first quarter of **2026** is not accidental. It is the direct consequence of a systematic campaign of Russian strikes on **thermal power plants**, **transformers**, **electrical substations** and **high-voltage lines**. According to Ukrainian data and reports from the **International Atomic Energy Agency**, **Russia** has deliberately targeted Ukrainian energy infrastructure since the winter of **2022–2023**, with a major intensification in **2025–2026**.

This strategy follows a war economy logic: an economy deprived of electricity cannot produce, cannot heat its homes, cannot run its industries. The declines in construction (**-4.5%**) and transportation (**-9.4%**) are cascading effects of energy disruptions. This is not a natural recessionary business cycle — it is deliberate economic destruction.

### What the contraction does not say: the resistances

The sectoral contraction figures are real. But they do not tell the whole story. **Ukrainian agriculture** — which has maintained remarkable production levels despite the war — does not appear among the sectors in crisis. The **domestic defense industry**, producing hundreds of thousands of drones per month, represents a rapidly growing sector in a wartime context. **Digital services** — an important part of the Ukrainian economy — continued to function through remote work and investment in communication infrastructure resilience.

*Ukraine's economy in 2026 resembles a boxer absorbing body blows to its infrastructure while hitting back through the defense industry, agriculture and digital services. This is not an economy collapsing. It is a war economy evolving — painfully, but resolutely.*

## The IMF, the National Bank and 2026 Forecasts

### Downward revisions — but growth maintained

The **IMF**'s revised forecasts for **Ukraine** in **2026** — between **1%** and **1.6%** growth — are less optimistic than initial projections but remain in positive territory. A country whose **GDP** grows by **1%** during a total war, despite massive strikes on its infrastructure, is not an economically defeated country. It is a country resisting.

The **National Bank of Ukraine** itself emphasized that the first-quarter contraction is sectoral and linked to energy strikes — not a structural deterioration of the economy. It maintains its stabilization forecasts for subsequent quarters, conditional on the continuation of international aid and the absence of new massive strikes on infrastructure.

### International aid as a shock absorber

**Ukraine** is receiving in **2026** an unprecedented level of international aid. The first disbursement of **3.2 billion euros** from the European **90-billion loan**. The **3.39 billion dollars** from the **World Bank**. Multiple bilateral envelopes from Western partners. Without this aid, the contraction would be far more severe. With it, **Ukraine** can pay its civil servants, maintain essential social services and preserve a minimum fabric of economic activity.

*I want to be clear: without international aid, the Ukrainian economy would have collapsed in 2022. With it, it contracts by 0.6% in the first quarter of 2026. That is the difference between survival and destruction. Western taxpayers are paying for something real and just. Let us never forget that.*

## The Economic Strategy of Victory

### Reforms and conditionality: a forced modernization

**Ukraine** adopted in **2026** **13 laws and 7 decrees** of reform to unlock **3.39 billion dollars** from the **World Bank**. These reforms cover public procurement, energy, agriculture and housing for veterans. In other circumstances, these reforms would have taken years of political debate. The war accelerated the timeline. That does not come without pain — some reforms are locally unpopular — but the long-term result will be a more transparent, more competitive economy better aligned with European standards.

This trajectory of reform forced by aid conditionality is paradoxical: the war destroys on one side while institutions modernize on the other. The post-war **Ukraine** that emerges from this process will be economically more robust than the **Ukraine** of before **2022** — if aid continues and reforms are sustained.

### The defense industry as a new engine

The rapid scaling of Ukraine's domestic defense industry (**95%** domestic drone production, **485,000 systems** delivered in five months in **2026**) is creating a new high-technology industrial sector. If this industry can be partially converted or diversified after the war — toward civilian drone technologies, autonomous systems, precision electronics — it could represent one of the pillars of future Ukrainian economic growth.

*A drone industry producing at the speed of war. Ukrainian engineers creating cutting-edge technologies under the pressure of necessity. This pool of talent, these industrial capabilities — that is the true wealth of postwar Ukraine. Let us not allow it to go into exile.*

## My Letter to Ukraine: Hold and Reform

### What you are doing that is remarkable

**Ukraine**, I am writing you this letter to say what the **IMF** figures cannot express. You are carrying out reforms in wartime. You are maintaining a functioning economy under bombs. You are producing drones by the hundreds of thousands while your power plants burn. You are organizing reconstruction conferences in **Gdańsk** while **Moscow** sends missiles over **Kyiv**. This capacity to hold simultaneously the present of war and the future of peace is extraordinary. I do not say this to console — I say it because it is factual.

The **0.6%** contraction in the first quarter of **2026** is a real economic wound. But it is also a measure of your resistance: after months of strikes on your power plants, you fall back less than one percent. Under the circumstances, that is a form of economic victory.

### What I hope for your future

I hope international aid will keep flowing, that reforms will hold, that the defense industry will diversify, that the talent that fled in exile will come back to rebuild. Above all, I hope that peace — a just peace, not a capitulation — will come before the economy is too deeply damaged. And when that peace comes, the world will need to be there to support reconstruction in proportion to the resistance you will have demonstrated.

*I am not going to pretend that 0.6% contraction means nothing. It is real, it is painful, it means businesses closing and workers searching for jobs in a wartime context. But I remain convinced that Ukraine is standing, and that the numbers, properly read, confirm it. Economic resistance is an integral part of military resistance. And Ukraine resists.*

## Ukrainian Economic Resilience in Regional Context

### A comparison that gives the measure of the effort

To truly understand what a **0.6%** contraction of Ukrainian **GDP** means, it must be compared to what other economies experienced in similar situations. During **World War I**, Russian industrial production fell by more than **40%** between **1914** and **1917**. During the **2014–2022** conflict in **Ukraine**, the Ukrainian **GDP** had already fallen by more than **15%** following the annexation of **Crimea** and the conflicts in **Donbas**. In **2022**, the large-scale invasion triggered a contraction of more than **29%**. Against this historical backdrop, the **0.6%** contraction for the first quarter of **2026** is not a sign of failure — it is a sign of exceptional resilience.

Even in economies that are not absorbing infrastructure strikes and massive human losses, a **0.6%** contraction would be a mediocre but non-catastrophic performance. For an economy at total war, bombed daily, with a third of its territory occupied or recently liberated and millions of its workers displaced or at the front, this limited contraction testifies to a remarkable institutional and economic adaptability. Economic analysts who compare these figures to pre-war **GDP** without accounting for context are committing a fundamental analytical error.

### The sectors holding and the sectors suffering

Ukraine's economy in **2026** is deeply asymmetric. Some sectors are suffering massively — agriculture in eastern regions, construction in bombed areas, tourism and travel-related services. Others surprise with their resilience or even growth: technology, processed agri-food, agricultural exports through alternative **Black Sea** corridors and, most spectacularly, the defense industry. This last sector, virtually nonexistent as a distinct economic activity before **2022**, now represents a significant share of Ukrainian industrial activity.

The **Ukrainian diaspora** also contributes to the economy through remittances representing several **billion dollars** per year — a revenue flow that directly supports the consumption of households remaining in **Ukraine**. International aid, even if often accounted for separately from **GDP** in the strict sense, injects considerable resources into the real economy — financing civil servant salaries, equipment purchases and infrastructure projects. The **0.6%** contraction does not capture this complex reality of an economy that is transforming as profoundly as it is suffering.

*Ukrainian economic figures do not say what they appear to say. Behind the -0.6%, there is an economy resisting, reinventing itself, finding alternative markets, training its own armaments engineers. This is a story of economic survival that deserves better than out-of-context comparisons to peacetime economies.*

## Ukrainian Fiscal Policy Under Maximum Constraint

### Financing the deficit: between allies and markets

**Ukraine**'s budget in **2026** is structurally in deficit — war costs more than the economy can generate in tax revenues. This deficit is financed through a combination of three sources: direct budgetary aid from allies (primarily the **EU**, the **United States** and **Japan**), loans from international financial institutions (**IMF**, **World Bank**, **EBRD**) and — increasingly — international capital markets through bond issuances. This last source, still marginal in **2023**, has grown in importance as **Ukraine**'s capacity to honor its obligations has been demonstrated.

Controlling the budget deficit is a stated priority of the **Zelensky** government — not because austerity would be economically justified in wartime, but because it is necessary to maintain the confidence of international creditors. Every additional percentage point of **GDP** in deficit must be financed by additional borrowing — and that borrowing has a cost, comes with conditions and depends on institutional credibility that **Ukraine** must carefully preserve. The balance between war needs and fiscal discipline is one of the most delicate exercises the Ukrainian Finance Ministry manages daily.

### Fiscal pressure and administrative reforms

To broaden its tax base despite the economic contraction, **Ukraine** has undertaken a series of administrative reforms aimed at reducing the informal economy and improving tax collection. The digitization of tax administrations, accelerated by necessity during the war, has significantly improved declaration and tax payment rates. Mandatory electronic invoicing in several sectors, strengthened customs controls and anti-**VAT fraud** measures have generated significant additional revenue despite the war.

These administrative reforms are not merely emergency measures — they create institutional habits and computer systems that will remain useful after the war. Post-war **Ukraine** will have a more modern and efficient tax administration than the one that existed before **2022** — a paradoxical legacy of wartime constraint. This improvement in economic governance is also one of the conditions required by international financial institutions to release tranches of their financial support.

*Ukraine manages its war budget with a rigor that many peacetime countries never achieve. This is not virtue — it is necessity. But necessity forges habits. And these habits, applied to reconstruction, will make Ukraine a healthier economy than it has ever been.*

## Economic Reforms in the Context of EU Accession

### European alignment as a driver of transformation

**Ukraine** has been an **EU** membership candidate since June **2022**, and formal accession negotiations began in **2024**. This process creates a demanding framework that forces Ukrainian reformers to progressively align laws, regulations and institutional practices with European standards. From judicial reform to competition policy, from data protection to environmental standards, the agenda for alignment with the **acquis communautaire** is vast — and implementing it during an active war is a challenge without precedent in the history of European enlargement negotiations.

**EU** accession is both a political objective and an economic driver. Ukrainian companies anticipating integration into the European single market have a clearer investment horizon and improved commercial prospects. Foreign investors considering investments in post-war **Ukraine** see in the European trajectory a long-term institutional guarantee. And Ukrainian citizens who chose **Europe** in **2014** on the **Maidan** see in this progressive accession the confirmation that their choice was right — an emotional and political dimension that economists often underestimate.

### The obstacles and internal resistance

The **EU** accession process encounters internal resistance in **Ukraine** — not only from oligarchs whose interests would be threatened by greater competition, but also from economic sectors that fear being overwhelmed by European competition. Agriculture is a telling example: the Ukrainian agricultural sector is both a strength — **Ukraine** is one of the world's breadbaskets — and a source of tensions with countries like **Poland** and **Romania** whose farmers suffer from Ukrainian low-price competition.

These tensions are not insurmountable — they are part of the normal European integration process, which has always involved difficult negotiations on exceptions and transition periods. But they signal that the path to accession will be long and strewn with complex political obstacles, even after the war ends. **Ukraine** will need to build coalitions of interests inside and outside to navigate these tensions — a diplomatic and political exercise of considerable complexity.

*Reforming under bombs to join Europe. That is the impossible challenge Ukraine is now meeting. Every reform adopted, every European standard integrated, is one more brick placed in the edifice of a post-war Ukraine capable of holding its place in the Union. History will record that this country reformed while it bled.*

## Conclusion: Numbers Lie When You Forget Their Context

### Do not let Russian propaganda read your statistics for you

**Russia** will read the **0.6%** contraction of Ukrainian **GDP** as proof that its strategy of economic strikes is working. That is true in the short term. It is false in the medium term. An economy that survives a total war, that reforms under constraint, that develops new high-technology industries, that receives and manages billions of international aid with growing transparency — this economy is not on the path to defeat. It is on the path to transformation.

Numbers must be read in context. And in the Ukrainian context of **2026** — massive strikes on thermal power plants, high-intensity total war, national existential challenge — a contraction of **0.6%** is a testimony to strength, not weakness. I wanted that to be said clearly.

*To a Ukraine contracting by 0.6% despite the bombs, reforming despite the urgency, honoring its debts despite the war — I say this: you deserve Europe's unconditional support. Not out of pity. Out of respect for what you are building under conditions we cannot imagine. Hold on. Europe is waiting for you.*

**By Maxime Marquette, columnist**

## Columnist's transparency note

### Editorial stance

I am not a journalist but a **columnist and analyst**. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. **I claim analytical clarity**, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

### Method and sources

This text keeps the basic distinction between **verified facts and interpretive analysis**. The rule never changes: a factual claim is published only when a verifiable source supports it, and the sources this article actually used are listed under **Sources**, never here.

**Primary source families** used by the publication, when the story has them: official statements from governments and international institutions, public statements by political leaders, reports from intergovernmental organisations, dispatches from recognised international news agencies.

**Secondary source families**: specialised publications, internationally recognised news media, analyses from established research institutions, reports from industry organisations.

When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under **Sources**.

### Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a **critical, contextual synthesis** based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.

## Sources

### Primary sources

- [Euromaidan Press — Ukraine's economy posted its sharpest contraction since the wartime recovery began — June 23, 2026](https://euromaidanpress.com/2026/06/23/ukraine-economy-contraction-june-2026/)

- [Euromaidan Press — Russo-Ukrainian war, day 1581: Ukraine's economy just posted its worst contraction — June 24, 2026](https://euromaidanpress.com/2026/06/24/russo-ukrainian-war-day-1581/)

### Secondary sources

- [Euromaidan Press — Ukraine passes 20 reforms to unlock $3.39 billion from World Bank — June 25, 2026](https://euromaidanpress.com/2026/06/25/ukraine-passes-20-reforms-to-unlock-3-39-billion-from-world-bank/)

- [Kyiv Independent — Ukraine receives first tranche of 90-billion euro loan from EU — June 25, 2026](https://kyivindependent.com/ukraine-receives-first-tranche-of-90-billion-euro-loan-from-eu/)

- [United24 Media — Ukraine's Homegrown Drone Industry Reaches 95% of Military Procurement — June 25, 2026](https://united24media.com/war-in-ukraine/ukraines-homegrown-drone-industry-reaches-95-of-military-procurement-20155)

- [Washington Times — EU releases 3 billion-euro loan package for Ukraine's recovery — June 25, 2026](https://www.washingtontimes.com/news/2026/jun/25/eu-releases-3-billion-euro-loan-package-ukraines-recovery-part-2-year/)

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Source: Maxime Marquette, MadMax. When citing, name the author and link https://mad-max.co/en/article/lettre-ouverte-a-l-ukraine-qui-contracte-votre-economie-resiste-meme-en-reculant