Ukrainian economy is shutting down as Putin turns the lights off

Russia has intensified its campaign against Ukraine’s energy system, unleashing a series of large-scale strikes that have plunged cities into darkness, crippled industry and raised fears of a deepening humanitarian and economic crisis as winter grips the country, reported Euromaidan Press.
Over the past several days, explosions have rocked Kyiv as Russian missiles and drones targeted power infrastructure across Ukraine, at one point leaving around 1.2mn properties without electricity nationwide during sub-zero temperatures, Reuters reported. Night-time cold has fallen well below freezing, amplifying the impact of blackouts on households, businesses and critical services.
The latest wave of attacks peaked on January 27, when Russian forces struck power facilities in multiple regions. Electricity supplies were cut to consumers in Kharkiv, Odesa, Dnipropetrovsk and Donetsk. In Odesa, extensive damage to a power facility operated by DTEK killed three people and injured 35 others, according to local authorities. In Kharkiv, Ukraine’s second-largest city, missile and drone strikes left about 80% of consumers without power, damaging residential buildings and a school.
Further south, a gas pipeline was hit in the Mykolaiv region, while in western Ukraine an infrastructure site in Brody — a key junction for oil pipelines — was damaged. A day earlier, Russian artillery and drones struck the Kherson thermal power plant, the sole source of heating for tens of thousands of residents, plunging the city into one of the most severe heating crises since the start of the war.
Kyiv, which has endured repeated strikes on its thermal power plants, is racing to replace lost capacity with decentralised solutions such as cogeneration units and modular boiler houses. But officials and analysts warn that such measures can only soften the blow, not compensate for the systematic destruction of large-scale generation.
“I don’t think people fully appreciate the scale of humanitarian catastrophe in Kyiv and now also in Kharkiv (two of Ukraine’s largest cities) because much of the impact is postponed,” said Leonid Ragozin, a journalist and bne IntelliNews columnist.
“It takes time for people to get their head around evacuation as they sleep in unheated apartments or tent camps the authorities are now setting up,” he said. “But many of the apartment blocks will have heating and sewage systems destroyed by the end of the winter and not realistically reparable in full for a couple of years after the end of war.”
As living conditions deteriorate, Ragozin warned of a slow but steady depopulation of Ukraine’s major cities. “People will keep leaving their homes in summer and before next winter as it gradually dawns on them that these conditions are not quite temporary,” he said. “The cities will be getting depopulated, in short.”
Beyond the immediate humanitarian toll, the blackout campaign is increasingly choking the backbone of Ukraine’s economy: heavy industry. A stark headline in Euromaidan Press captured the concern: “Russia is creating conditions for technogenic catastrophe, as generators can’t save Ukraine’s steel plants with 500K people involved.”
According to industry estimates, around 400,000 jobs, 7.2% of Ukraine’s gross domestic product and an economic multiplier effect of about $4.17bn depend directly or indirectly on the mining and metallurgical sector — all of it reliant on stable, high-capacity electricity that Russia is now systematically destroying.
Economic Pravda reported that Russian attacks pose a serious threat to Ukraine’s mining and metallurgical enterprises, raising the risk of industrial accidents and further undermining an economy already battered by nearly three years of war. Overall losses from Russia’s aggression are estimated at about $800bn.
Millions of civilians have been left without electricity, heating and water as temperatures drop to minus 15 degrees Celsius, while Russian drones and missiles continue to strike around the clock.
Metinvest, Ukraine’s largest steel and mining group, has repeatedly warned that metallurgical and mining enterprises operate continuous technological cycles and require a stable, uninterrupted industrial power supply.
“The production processes … cannot technically be replaced … without the risk of production stoppages, accidents, and irreversible equipment damage,” the company said in a statement.
Unlike retail, services or small manufacturing, autonomous generators are not a viable solution for blast furnaces, rolling mills or deep mining operations that consume vast amounts of electricity and must maintain precise temperatures and pressure.
The Ukrmetalurgprom industry association said prolonged blackouts in the sector would have far-reaching consequences. Even during wartime, mining and metallurgy and their related industries accounted for 7.2% of Ukraine’s GDP in 2024 and generated more than 15% of the country’s exports, providing crucial foreign-currency revenues.
More than 63,000 people work directly in the mining and metallurgical complex, and about 400,000 when related industries such as transport, engineering and services are included. In 2024, metallurgy and mining generated around $835mn in tax revenues, while the broader multiplier effect on the economy was estimated at $4.17bn, particularly in heavily industrialised regions.
Technogenic risks are an added concern. Mining and metallurgical enterprises are classified as high-risk facilities that require uninterrupted power to prevent accidents, explosions or environmental disasters. Steel plants also play a critical role in maintaining municipal infrastructure, supplying heat, water and technical services to surrounding communities.
The energy situation remains “critically difficult,” industry representatives say. Metinvest’s facilities in the Zaporizhzhia and Dnipropetrovsk regions have repeatedly been forced to suspend operations in recent months due to power outages triggered by Russian strikes.
Risks remain high, and without a stable power supply Ukraine faces the prospect of losing not only current output but also its long-term industrial capacity, analysts warn.
The broader macroeconomic outlook is already deteriorating. The World Bank said this month that Ukraine’s economic growth is expected to slow to about 2% this year, down from 2.9% last year, according to its report “The Economic Situation in Europe and Central Asia: Jobs and Prosperity”. Growth is forecast to remain at roughly 2% in 2026.
The bank cited the prolonged war, damage to infrastructure and its chilling effect on investment and business activity. Gas imports have risen to their highest level in nearly two years as strikes have limited domestic production. Growth has also been weighed down by weaker agricultural exports, due to unfavourable weather and the EU’s restoration of pre-invasion trade rules that tightened restrictions on key Ukrainian products.
As winter deepens and Russia continues to target transformers, power plants and substations, Ukrainian officials fear that the cumulative effect of darkness, cold and industrial shutdowns could prove as damaging as any single missile strike — slowly grinding down the economy and emptying the cities Russia cannot fully capture by force.
Agriculture: shrinking output and rising input risks
Ukraine’s agricultural sector, long a stabilising force for the economy during wartime, is showing increasing signs of strain as power shortages, logistics disruptions and higher input costs take their toll.
Overall agricultural production fell by 6.8% last year compared with 2024, according to the State Statistics Service. Crop output declined by 7.5%, while livestock production dropped by 4.1%. Only two regions posted growth: Chernihiv, where production rose 4.1%, and Sumy, up 0.5%. All other regions recorded declines, with the steepest contractions in frontline and recently occupied areas — Donetsk down 44.7%, Kherson down 33.7% and Zaporizhzhia down 21.6%.
Farmers are also facing mounting pressure from rising input costs. Fertiliser imports rose 13.3% year-on-year, driven mainly by higher nitrogen fertiliser purchases, as domestic production struggled with energy shortages. Imports totalled 2.898mn tonnes in 2024 and are expected to reach 3.285mn tonnes in 2025, with core fertiliser types accounting for 3.058mn tonnes.
Ukraine Business News reported the increase remains insufficient to fully meet domestic demand, raising concerns about yields in the coming planting season if power disruptions persist.
Metallurgy: systemic risk to an industrial backbone
Ukraine’s metallurgical industry is among the sectors most exposed to power outages, with blackouts posing not just economic but technological and safety risks.
Metinvest, the country’s largest steel and mining group, has warned that mining and metallurgical enterprises operate continuous production cycles that require a stable, high-capacity electricity supply. According to the company, decentralised solutions such as generators cannot replace grid power without risking emergency shutdowns, accidents and irreversible damage to equipment.
The Ukrmetallurgprom industry association said the stakes for the economy are high. Even during wartime, metallurgy and related sectors accounted for 7.2% of Ukraine’s GDP in 2024 and more than 15% of exports. The sector generated about UAH36bn ($870mn) in tax revenues last year, with a total multiplier effect on the economy estimated at UAH180bn ($4.3bn).
Repeated Russian strikes on energy infrastructure have already forced Metinvest facilities in the Zaporizhzhia and Dnipropetrovsk regions to suspend operations several times in recent months, underscoring the fragility of industrial output as attacks continue.
Construction: factories grind to a halt
The construction materials industry is increasingly suspending operations as power shortages and surging electricity prices undermine production.
The All-Ukrainian Union of Building Materials Manufacturers said the energy crisis has become existential for many producers. Manufacturing cement, concrete, glass and other materials is highly energy-intensive, leaving companies dependent on a stable electricity supply.
Some equipment cannot operate at temperatures below +5 degrees Celsius, while concrete mixing becomes impossible without power as materials freeze in warehouses. As a result, numerous factories have halted production indefinitely, unsure when electricity supply will stabilise.
Costs have risen sharply. In 2022, industrial electricity prices averaged around UAH4 ($.09) per kilowatt hour. They have since climbed to about UAH14 per kWh. Electricity generated by industrial generators costs between UAH18 and UAH20 per kWh, rendering generator-based production uncompetitive.
The industry is exploring cogeneration plants as a partial solution, but manufacturers say such investments take time and capital — both scarce under wartime conditions.
Retail: empty shelves and failing refrigeration
As bne IntelliNews reported, retail is emerging as one of the most visible casualties of the energy crisis, particularly in major cities.
With no clear timeline for restoring stable heating, apartment block managers in Kyiv and surrounding areas have drained water from central heating systems to prevent pipes from freezing and bursting. The extreme cold and rolling blackouts are also forcing supermarkets and offices to shut down.
“The humanitarian crisis in Kyiv and the region is intensifying amid prolonged power outages and severe winter conditions,” said Iuliia Mendel, President Volodymyr Zelenskiy’s former press secretary, in a post on social media.
She added that several supermarket chains had partially or temporarily closed locations due to extended blackouts and equipment failures in sub-zero temperatures.
Retail chains say constant power surges and outages are destroying refrigeration units and other critical equipment, leading to food spoilage, mounting losses and permanent closures. As more stores suspend operations indefinitely, residents in urban areas are increasingly struggling to access basic goods, with images of empty shelves spreading across social media.
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