Esboço econômico

Indicadores econômicos

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.

Three 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. Macroeconomic indicators for Ukraine in 2024 show growth, but the positive trend is slowing. After the recovery from the severe 2022 decline (-28.8% GDP), the low comparison base that fueled a record +5.3% growth in 2023 has now been exhausted. The Ministry of Economy forecasts 3.6% y/y growth for 2024. This slowdown is attributed to factors such as a low harvest, weaker external demand, intensified hostilities, strikes on energy and critical infrastructure, and increased staff shortages. Key growth drivers in 2023 included the maritime corridor, boosting agribusiness and steel exports, defence orders supporting machine building, and international aid bolstering consumer demand. With the ongoing war and plateauing external support, growth is projected to slow to 2.5% in 2025. However, it could be stronger if the security situation stabilizes and reconstruction and recovery efforts gain momentum.

Ukraine's budget deficit grew by about 33% in 2024, reaching around USD 42 billion, though it was lower than the projected 43.8 billion, according to the National Bank of Ukraine. A record influx of foreign aid in December helped cover state budget expenses and create a liquidity reserve for early 2025. The primary spending areas were defence, security, and social programs. Ukraine also received USD 41.7 billion in foreign budget support throughout the year. The budget deficit is expected to remain large, at around 20% of GDP in 2025 and 2026 (data OECD). With the war assumed to continue through 2025, the government plans for defence and security spending to rise to 26.3% of GDP, excluding in-kind support from external partners. However, a ceasefire may reduce this share. The 2025 budget aims to curb spending on social services, healthcare, and education to 8.4% of GDP, about 1% lower than in 2024. The government intends to finance 57% of spending through domestic revenues, boosted by inflation, a depreciating exchange rate, and increased corporate income, excise, and military levies on labour income—valued at 1.6% of GDP. The large deficits will push public debt to around 110% of GDP in 2025, with three-quarters of new debt raised externally. External grants are expected to finance 1% of GDP. External financial support of USD 27.2 billion in 2024 (up to mid-November) and military and humanitarian aid of USD 32.7 billion in 2024 (up to September 1) have helped maintain foreign exchange reserves and stabilize the exchange rate against USD between July and late November 2024. Meanwhile, inflation accelerated to 12% in 2024, driven by groceries as well as electricity (data National Bank), and is expected to converge towards the central bank’s 5% target in the medium term.

The average unemployment rate was estimated at 14.2% in 2024 by the IMF, from 19.1% one year earlier. However, the International Organization for Migration (IOM) released a report highlighting the impact of nearly three years of war on Ukraine’s employment, mobility, and labour market. The report found that recently displaced individuals were more likely to be unemployed (24%) compared to those displaced for over a year (13%), reflecting the challenges of economic integration for newcomers lacking networks and resources. Poverty in Ukraine increased by 1.8 million in 2023 due to reduced employment and incomes. Despite labour market slowdowns, social assistance programs helped, with 20% of households receiving conflict-related support (World Bank). The situation remains difficult, as only 40% of adults were employed in Q3 2024, and more than half of households reported worse financial well-being compared to February 2023.

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