April Economic Review. How is the fuel crisis affecting the Ukrainian economy?

Since March 2022, the Centre for Economic Strategy (CES) has been preparing monthly reviews of Ukraine’s economy during a full-scale war.  The special topic of April review is: «How is the fuel crisis affecting the Ukrainian economy?».

All previous reviews can be found under the link.

Fuel contributed 0.7 pp to the 7.9% inflation rate and was the fastest growing category in March. The NBU kept the policy rate at 15% in response to the inflationary pressure. Fuel crisis had no substantial impact on state budget revenues in March. The Iran war imposed the risks of a slowdown in global growth and rising inflation. High fuel costs, supply shortages and restrained external demand could lead to lower harvests, production and exports in Ukraine, driving price growth.

Key changes in the Ukrainian economy in April:

• Monetary sector: Inflation in March 2026 reached 7,9% y-o-y, up from 7,6% in February, and rose by 1,7% m-o-m. Fuel contributed 0.7 pp to the 7.9% inflation rate and was the fastest growing category in March. Key policy rate remains at 15%, contrary to previous projections. High policy rate will continue to keep business lending rates elevated. International reserves remain high but affected by prices of gold. Gold prices fell as safe-haven demand eased amid the Iran war and the stronger US dollar
• Fiscal sector: Fuel crisis had a minor impact on revenues in March. However, more than a half of annual increase came from import VAT. Almost the entire reserve fund is already used up in March. 93% of this spending was predictable and belonged in the regular budget. War needs increased in February. Total expenditures increased by 30% m-o-m in February, mainly due to defence spending
• Sectoral analysis: Business sentiment and economic activity improved in March amid a stable energy situation. However, electricity supply remained fragile in April amid regulatory decisions. The sowing campaign for summer crops has started in all regions, and the Government has retained support programs for agricultural producers.
• Special topic: The Iran war has driven up fuel and gas prices and led to resource supply disruptions. It could lead to a slowdown in economic activity in Ukraine and globally, with lower harvests, restrained industrial production and exports, and intensified inflationary pressures.
• See our report below for further details.