Russia’s attacks on Odesa are triggering an economic crisis: GDP and the planting season are at risk
21 August 06:36
Russian strikes on Black Sea ports have posed one of the greatest threats to the Ukrainian economy since the start of the full-scale war. Due to damage to port infrastructure, risks to ships, and rising freight costs, grain exports have virtually ground to a halt right in the middle of the busy harvest season.
According to an Oxford Economics estimate cited by Bloomberg, Ukraine could lose about 1.8% of its GDP in 2026 due to ongoing problems with maritime exports, reports "Komersant Ukrainian".
In 2027, losses could rise to 2.1% of GDP, and under a pessimistic scenario, reach 5.3%.
Why Odessa’s ports are so important
Before the start of the new wave of attacks, more than 90% of Ukraine’s grain and oilseeds were shipped through Black Sea ports. The maritime route remains the cheapest and most efficient way to deliver large shipments of agricultural products.
In July, according to industry associations, Ukraine lost approximately one-third of its capacity to export grain via the Black Sea. Shipping capacity fell from roughly six million to four million metric tons per month.
The situation continued to deteriorate: during the first two weeks of August, grain export volumes fell by about 75% year-over-year.
How a Port Blockade Transforms into GDP Losses
The consequences of the attacks are not limited to damaged terminals. The problem is gradually spreading to the entire economy:
- Ports are reducing grain intake and shipments.
- Traders are reducing their purchases from farmers.
- Domestic prices are falling due to a surplus of produce.
- Farmers are losing working capital.
- The fall planting season and next year’s harvest are at risk.
- Ukraine is losing out on foreign exchange earnings and tax revenue.
- Production is declining in transportation, logistics, processing, and related industries.
The agricultural sector accounts for more than half of Ukraine’s export revenue. Therefore, even a temporary suspension of maritime shipments affects the foreign exchange market, budget revenues, and overall economic growth rates.
In the NBU’s July Inflation Report, direct losses from the shortfall in export revenue in the second half of 2026 were estimated at over $2 billion. According to Reuters, the total amount could approach $2.5 billion.
Why Farmers Have Nowhere to Store Their Grain
A good harvest, which under normal circumstances would be good news, is now creating additional pressure. Grain is coming in from the fields, but it cannot be shipped quickly to buyers.
The total capacity of Ukrainian grain storage facilities is estimated at approximately 59 million metric tons. According to information published by Bloomberg, these facilities could be filled as early as the beginning of November. By late fall, the storage shortage could reach 11 million metric tons.
Farmers are storing part of the harvest in temporary plastic sleeves right in the fields. However, this method does not fully solve the problem: additional equipment, security, and humidity control are required.
Domestic prices are falling, while global prices are rising
Due to the lack of exports, a grain surplus is building up in Ukraine. Farmers are forced to lower prices to cover at least the minimum costs for fuel, wages, and loan payments.
At the same time, the situation on the global market is the opposite. Due to disruptions in Black Sea shipments, wheat futures prices have risen by more than 17% since early July .
The result is a paradox: buyers abroad are paying more, but Ukrainian producers are earning significantly less because they cannot deliver their products to foreign markets.
The next planting season is at risk
The most dangerous consequence of the port crisis may not become apparent now, but in 2027. Without income from crop sales, farmers will lack the funds for:
- seeds and fertilizers;
- fuel;
- pay their workers;
- equipment repairs;
- land rent;
- loan repayments;
- preparation for spring planting.
Some farms may reduce their cultivated areas, stop growing high-cost crops, or postpone fieldwork. This explains the forecast that economic losses in 2027 could be greater than in 2026.
How much grain will Ukraine be able to export?
Due to attacks on ports, the forecast for agricultural exports for the 2026/2027 season has been significantly revised.
Ukraine is expected to export approximately 29.6 million metric tons of agricultural products, down from the previously projected 64.4 million metric tons. Wheat exports may drop to 8.3 million metric tons, down from the previous estimate of 17.6 million metric tons.
Even with maximum utilization of railways, road crossings, and Danube ports, alternative routes will not be able to fully replace maritime routes.
Why the Danube and the Western Border Are Not the Solution
Ukraine is attempting to reroute cargo through Romania, Slovakia, Hungary, and the Polish border. However, these routes have a number of limitations:
- lower throughput capacity;
- more expensive logistics;
- different rail gauge widths;
- the need to transship grain;
- trade restrictions imposed by certain neighboring countries;
- low water levels in the Danube;
- the threat of Russian attacks on Danube ports and the railway.
Kyiv and Bucharest have agreed to increase shipments through the Romanian port of Constanta, but this route is also unable to replace the capacity of Odesa, Chornomorsk, and Pivdennyi.
What the Government Is Doing
To support farmers, the government has expanded preferential lending programs and eased the conditions for obtaining working capital loans. It also plans to increase temporary crop storage capacity.
Ukraine has submitted a request to the European Union for a grant of 220 million euros. The funds may be used to subsidize interest payments on loans for small and medium-sized agricultural enterprises.
What “minus 2% of GDP” Actually Means
The projected losses of 1.8–2.1% of GDP do not necessarily mean that the entire Ukrainian economy will contract by exactly 2%. This refers to the shortfall in production the country may experience compared to a baseline scenario in which maritime exports operate without prolonged disruptions.
The final outcome will depend on the duration of the attacks, the speed of port infrastructure repairs, ship insurance, the effectiveness of air defense, and the ability to expand alternative routes.
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