Russia launched 216 drones at Ukraine hours after a ceasefire expired. Ukraine and Germany prepare a 10-year deal on joint production of drones. Russia acknowledges its GDP shrank almost three-fold.
Russia launched 216 drones at Ukraine hours after ceasefire expired
Russia launched 216 drones at Ukraine overnight on Tuesday, hours after a ceasefire expired. The Ukrainian Air Force said the air defenses had shot down or otherwise neutralized 192 drones of the Shahed, Gerbera and Italmas types as well as Parodiya decoy drones in the north, south, east and center of the country.
Twenty-five drones hit target in 10 locations and the falling debris fell in five other places, it added.
Reacting to Russia’s overnight strikes on Ukraine, Ukrainian President Volodymyr Zelenskyi said: “Russia itself chose to end the partial silence that had lasted for several days. Overnight, more than 200 attack drones were launched against Ukraine. Aerial bombs were used again on the front – more than 80 of them, and over 30 air strikes were recorded.”
The drones were intercepted over the regions of Dnipro, Zhytomyr, Mykolaiv, Sumy, Kharkiv, and Chernihiv as well as in the capital, Kyiv and the surrounding region, he continued.
“People have been reported injured as a result of these strikes. And, unfortunately, there are fatalities,” Zelenskyi said, adding: “We have said that we will respond in kind to all Russian steps. Russia must end this war, and it is Russia that must take the step toward a real, lasting ceasefire.”
Ukraine, Germany prepare 10-year deal on joint production of drones
Ukrainian President Volodymyr Zelenskyi met with German Defense Minister Boris Pistorius in Kyiv on Monday. Pistorius visits Ukraine for the seventh time since the invasion.
They discussed joint defense production, ways to strengthen Ukraine’s air defenses and wider defense cooperation prospects, according to the Office of the President of Ukraine.
In the meeting, Zelenskyi thanked Pistorius and his team, the German government and Chancellor Friedrich Merz, as well as the German people for their support to Ukraine. Germany has provided more than 28.6 billion euro in military assistance to Ukraine since the invasion, Zelenskyi said, as cited by his office.
Germany and Ukraine are already working on six joint defense projects, but it’s just the beginning, he continued.
“I want to discuss with you a 10-year Drone Deal, joint production between Ukraine and Germany,” Zelenskyi told Pistorius.
The parties will cooperate to bolster Ukraine’s air defenses seen as a crucial step to shield the country’s energy infrastructure after a difficult winter.
Zelenskyi and Pistorius also spoke of Europe’s defense capabilities against ballistic missile threats and prospects for joint production of such anti-ballistic missile systems.
Germany and Ukraine are expanding the production of drones with various ranges, from less than 100 kilometers to 1,500 kilometers, Pistorius said in a joint news conference with Ukraine’s Defense Minister Mykhailo Fedorov in Kyiv on Monday, according to Interfax Ukraine. The quotes are cited according to how they appear in the news piece.
“We are focusing on proven projects, where we are developing partnerships between Germany and Ukraine. This, of course, particularly concerns the joint development and production of drones with varying ranges — from less than 100 kilometers to 1,500 kilometers,” Pistorius said.
He also said that Germany will continue to support the development of unmanned aerial systems and prioritizes long-range drones. “When deployed en masse, they can successfully penetrate and thus overwhelm enemy air defenses,” he was quoted as saying.
“This is an opportunity that we are also working on very intensively within NATO,” Pistorius said.
Germany wants to join the Brave1 defense platform, he added.
“I already announced this before our meeting in Berlin. Today, we are taking another step. Innovators who can present promising products will receive financial support through this platform. This way, their innovations can be applied on the battlefield at an early stage and tested for effectiveness,” Pistorius said.
Russia acknowledges its GDP shrank almost three-fold
The Russian government expects to avoid an economic downturn, while quick economic growth is not on the table.
Deputy Prime Minister Alexander Novak said the government now expects gross domestic product to grow by just 0.4% next year, down from a previous forecast of 1.3%, The Moscow Times said Tuesday.
Russia’s updated inflation forecast for 2026 is 5.2%, while the forecast for 2027 remains at 4%, Deputy Prime Minister Alexander Novak said.
“Today, the scenario conditions for socio-economic development through 2029 will be published [the Economic Development Ministry will publish them]. The forecast [for inflation] is 5.2% in December 2026 compared to December 2025. And annual inflation will reach the Central Bank of Russia’s target in 2027. So far we see that inflation has slowed down significantly and continues to slow down,” Novak said in an interview with the Vedomosti newspaper, according to Interfax Ukraine.
As reported, the previous official forecast of the Economic Development Ministry from September 2025 assumed inflation at 4% per year in 2026-2028.
“It is equally bad to move towards the inflation target at any cost, including at the cost of a significant decline in economic output, and to ‘overheat’ the economy with the risk of sliding into the uncontrolled growth of inflation,” Novak said.
The economy contracted by 0.3% in the first quarter, according to the Economic Development Ministry, even as President Vladimir Putin has urged officials and the Central Bank to accelerate growth, according to The Moscow Times. The paragraphs below are quoted from the article. Economist Andrei Gnidchenko of the CMAKP analytical center described the new forecast as a surprise after reviewing projections from major Russian and international institutions earlier this month.
Novak said the forecast was based on “conservative” assumptions, including an average Russian oil price of $59 per barrel this year and $50 per barrel over the following three years. Those assumptions are even lower than the Central Bank’s estimates. In April, the Central Bank raised its own forecast to $65 per barrel for this year and $55 for 2027-2028.
Novak said the lower oil-price assumptions would help contain budget spending at a time when state revenues — hit by a strong ruble and weaker oil prices — are falling while expenditure demands, including military spending, continue to rise.
Under the government’s framework, lower baseline oil-and-gas revenues would limit planned spending, while any additional energy income would be directed into the National Wealth Fund.
Economist Yegor Susin said the figures appeared to be “not exactly a forecast, but rather assumptions for drafting the budget.”
“The oil-and-gas component of the budget implies a significant reduction in spending, although in the autumn, of course, everything will be revised again depending on how conditions change,” Susin wrote.
Dmitry Polevoy, another economist, said the “apparently higher level of budget spending” remained the main source of uncertainty and risk for the outlook.
The government forecast also points to a difficult year ahead for households and businesses. Investment is expected to continue falling this year, while inflation is projected to remain elevated at 5.2%. Growth in Russians’ real incomes is forecast to slow to 1.6% from 7.7% last year, while consumer spending growth is expected to ease to 1.2% from 4% in 2025. Unemployment is projected to edge up slightly to 2.3%-2.4%, from 2.2% last year and in the first quarter of 2026.
The government expects conditions to improve from 2027 onward as the Central Bank cuts interest rates and earlier monetary easing begins feeding through into the economy.
GDP growth is forecast to recover to 1.4% in 2027 before accelerating to 2.4% by 2029. Investment, household incomes and consumer spending are also expected to strengthen from 2027, according to the forecast.
Even if those projections are met, however, the expected growth rates would remain well below the 3.5% annual expansion that several prominent Russian economists have described as the minimum needed for sustainable development.
Russia’s federal budget revenues from oil and gas dropped by 24% in 2025 to the lowest level since 2020, according to Finance Ministry data, as oil prices fell while the rouble appreciated, Reuters said in mid-January 2026.
Russia’s Financial Ministry projected an increased public deficit early in the year as the country’s oil and gas revenues were falling.
The financial state of Russia’s large and medium-sized companies continued to deteriorate in a sign of growing misbalances in the corporate sector, Ukraine’s Foreign Intelligence Service said in February 2026.
More than half of Russia’s large companies ended 2025 with falling profits, scaled back or froze investment projects, and many are preparing layoffs, The Moscow Times said in February, according to The New Voice of Ukraine. Around 300 companies were about to shut down in Russia, the news site said in March 2026.
The number of regions running a deficit also increased significantly — from 50 in 2024 to 74 in 2025, The Moscow Times said in February. The Russian Ministry of Finance announced in March that the federal deficit had skyrocketed. Russia’s state statistical entity Rosstat said in March that more than 17,000 companies had reported losses.
Russian supermarket chain VkusVill closed 286 stores last year, The Moscow Times said last month.
Magnit, Russia’s largest food retailer by store count posted a net loss in 2025, its first in more than two decades, the news site said.
Twenty-two Russian industries were facing severe deficits. Half of Russia’s small businesses are operating without profit, it also said.
