Ukraine flag Ukraine: Economic and Political Overview

The economic context of Ukraine

Economic Indicators

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

Nearly two years into the conflict, Russia's invasion of Ukraine stands as a tragic event with profound human and economic consequences. The invasion has inflicted staggering losses on both the people and the economy of Ukraine, erasing 15 years of development gains and exacerbating poverty. After contracting by nearly 30% in 2022, Ukraine's economy experienced a modest rebound last year, registering a growth of 2% (IMF, 3.5% according to the World Bank). The recovery can be attributed to sustained donor support, a more stable electricity supply, heightened government spending, improved agricultural yields, and the redirection of certain exports through Ukraine's western borders. The economic forecast for Ukraine anticipates growth rates of 3.2% in 2024 and a robust 6.5% in 2025 (IMF), with private consumption and public investments as key drivers. However, GDP would still be 20% below its pre-war levels and the overall economic outlook remains contingent on factors such as the progress of the ongoing war, the influx of foreign funds, and the evolution of export patterns.

Following an increase in 2023 (20.5% of GDP according to the EU Commission estimates), the general government deficit is expected to stay elevated in 2024 (19.7%). This is attributed to substantial expenditures associated with the ongoing war effort on the expenditure side, coupled with weak revenue growth stemming from a modest increase in GDP. In 2025, a reduction in total expenditure, particularly in war-related expenses, is anticipated, contributing to a partial narrowing of the fiscal deficit (to 12% of GDP). in March 2023, Ukraine secured a 48-month Extended Fund Facility (EFF) arrangement, granting access to USD 15.6 billion. This arrangement is integral to a larger USD 122 billion support package for Ukraine. The IMF-supported program, endorsed by the authorities, is designed to establish policies that uphold fiscal, external, price, and financial stability amid the heightened uncertainty resulting from the ongoing war. The debt-to-GDP ratio has been increasing steadily since the start of the invasion, reaching 88.2% in 2023, and is projected to surpass 100% by 2025. A tight monetary policy, falling food prices, and rapid repairs of the energy infrastructure contributed to a reduction in inflation, which was estimated at 17.7% last year. Assuming a continuation of easing supply constraints and a slowdown in global prices, inflation should further decrease throughout the forecast horizon (to 8.6% by 2025).

The labour market has shown signs of stabilization in 2023, driven by reduced net migration outflows and the partial return of internally displaced persons. However, the persistently high number of displaced individuals, both abroad and within Ukraine, will continue to exert pressure on the labour market, causing imbalances across regions and sectors. Despite anticipated economic growth, the unemployment rate – at 19.4% in 2023 - is projected to stay elevated, albeit on a declining trend. Concurrently, regional and sectoral labour shortages, coupled with an expected decrease in inflation, are likely to contribute to a recovery in real wages, especially in 2025.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 160.52177.20188.94193.60202.56
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 4,5835,3375,6635,6425,774
General Government Balance (in % of GDP) -
General Government Gross Debt (in % of GDP) 78.482.994.096.795.9
Inflation Rate (%)
Unemployment Rate (% of the Labour Force) 24.519.114.513.811.6
Current Account (billions USD) 7.97-9.75-10.83-15.89-14.14
Current Account (in % of GDP) 5.0-5.5-5.7-8.2-7.0

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

The agricultural sector plays a major role in the Ukrainian economy. In 2022, it contributed to 8.2% of the GDP and employed 15% of the working population (World Bank). The country stands as a leading global agricultural producer and exporter, holding a vital position in providing oilseeds and grains to the international market. With over 55% of its land designated as arable, Ukraine predominantly relies on agricultural products as its key exports. The main crops are cereals, sugar, meat and milk. Ukraine is the world's fifth-largest exporter of grain. Furthermore, the country is rich in mineral resources, mainly iron and magnesium, as well as in energy resources (coal and gas). However, the agriculture sector in Ukraine has suffered significant damage due to Russia's invasion, leading to a reduction in export capacity, the destruction of infrastructure and farmland, and a rise in fuel and input expenses.

The secondary sector employs almost a quarter of the active population and accounts for 19.2% of the GDP (World Bank). The Ukrainian manufacturing sector is dominated by heavy industries such as iron (Ukraine is the world's seventh-largest producer of iron) and steel. These two sectors alone account for around 30% of the industrial production; however, steel production is below its pre-2008 level. Coal mining, chemicals, mechanical products (aircraft, turbines, locomotives and tractors) and shipbuilding are also important sectors. Industrial production in Ukraine in January-June 2023 decreased by 2.9% compared to the same period in 2022 (when it decreased by 31.9% following Russia’s invasion). The iron and steel sector has experienced one of the steepest declines in production, with steel production dropping by 31.4% in the first half of the year.

The service sector employs 61% of the workforce and contributes to 60.8% of the GDP (World Bank). Ukraine is a country of energy transit, historically transporting Russian and Caspian oil and gas to Western Europe and the Balkans, through its territory. Nevertheless, in the context of tensions with Russia, Ukraine’s role as the main transit corridor has diminished, with Russia seeking alternative routes. Ukraine's banking sector exhibits a relatively modest asset-to-GDP ratio of 40%. While the top-5 banks show a moderate level of concentration, the sector displays a significant degree of state ownership, constituting 50% of net assets. Despite these dynamics, Ukraine's banking sector remained remarkably resilient even after the start of the war and serves as a crucial pillar supporting the real economy. After suffering from the impact of the COVID-19 pandemic, Ukrainian economic sectors were further hit by the consequences of Russia’s invasion. The massive infrastructure and facilities destructions, as well as mobilisation, disrupted activity.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 14.7 24.5 60.9
Value Added (in % of GDP) 8.2 19.2 60.8
Value Added (Annual % Change) -28.4 -43.2 -23.6

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist - Business Environment Rankings 2014-2018


Country Risk

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Latest Update: July 2024