Ukraine's economy is enduring its toughest period since the early months of Russia's invasion after sustained air strikes left its power system in tatters as the war enters a fifth year, forcing firms to cut output and shrinking state revenues.
From steel mills to miners, cement makers and food producers, Ukrainian industry is being forced to cut output and absorb rising costs as it struggles to shift work schedules and save equipment from emergency shutdowns, executives at eight companies said.
Sergii Pylypenko, CEO of Kovalska Group, Ukraine's largest producer of concrete and building materials, said the diesel generators it had bought could not power the entire output of its large factories:
"For more than two months now, we have been working under emergency power cuts without any predictable schedule," Pylypenko said.
"In certain periods, the lack of a stable power supply can reduce production volumes by up to 50 per cent."
Ukraine's economy shrank by nearly a third in the first year of the war and, despite modest growth during subsequent years, it remains far smaller than before the invasion and heavily reliant on government spending.
Nearly six million people have left Ukraine and more than three million are displaced within its borders, accounting for over a fifth of the pre-war population.
In February, the monthly business activity recovery index of the Institute for Economic Research in Kyiv – which compares the number of companies reporting that business is worse or better than last year - turned negative for the first time since 2023.
Ukraine's economy is vital not only to provide tax revenues to finance the war and fund debt, and to produce armaments, but also to provide jobs and economic prospects for soldiers and returning refugees when peace finally returns.
Oleksandr Myronenko, chief operating officer at Metinvest, a mining and metals group with annual revenues of around $US7 billion ($A9.9 billion), said the long power outages made it difficult to restart production after Russian strikes.
Metinvest - controlled by Rinat Akhmetov, one of Ukraine's richest men - has been a major generator of tax revenues and steel for the war effort.
It has forecast growth this year in Ukraine, but failed to achieve that in the first two months owing to the impact of Russian bombardment, Myronenko said.
"This included damage to generating capacities and also to the transport infrastructure, which affects not only steel makers but all producers in Ukraine: they have to decrease volumes," he said.
Nataliia Kolesnichenko, economist at the Centre for Economic Studies in Kyiv, estimated energy demand had exceeded supply by 30 per cent in January and February.
"The energy situation has deteriorated dramatically in recent months," she said.
Energy Minister Denys Shmyhal said that even though temperatures were warming, peak demand stood at 16.4 gigawatts, still well above the 12.3 gigawatts Ukraine was able to produce, and that it was importing almost two gigawatts at peak times.
Businesses are having to contend with lower output, rising costs, disruption of supply chains and longer delivery times. These all affect competitiveness and will increase inflation, already running at around 7 per cent, three economists said.
The power crisis has already prompted Ukraine's central bank to cut its forecast for economic growth this year to 1.8 per cent from 2.0 per cent – in line with the 1.8 per cent growth expected to be announced for last year.