It remains a quarter less than in 2021, but for the first time since 2022, following the onset of the full-scale invasion, it is healthier than that of the aggressor country, Russia, in several key aspects, according to the publication.
The Central Bank of Ukraine forecasts a GDP growth of 4% in 2024 and 4.3% in 2025. The currency is stable, and interest rates at 13.5% are close to the lowest levels seen in the past 30 months. Meanwhile, in Russia, rates are expected to soon reach 23% in order to halt the decline of the ruble, with GDP expected to grow by only 0.5–1.5% in 2025.
However, Ukraine is facing serious challenges: the escalation of the war, a reduction in domestic resources, and the influence of elected U.S. President Donald Trump, writes The Economist.
After Russia refused to extend the "grain agreement" in 2023, Ukraine opened its own maritime corridor, ensuring its security with drones and missiles. This allowed not only the resumption of grain supplies but also the export of metals and minerals, which are the country's second most important export. Thanks to this and Western aid, Ukraine has been able to continue its struggle, the publication states. However, a new phase is beginning, during which the economy faces its greatest challenges: a severe shortage of energy, human resources, and finances.
Despite ongoing repair works, the country can rely on less than half of the 36 GW of generating capacity it could utilize before the war. Recently, Russian attacks have resumed. Nevertheless, the country has become better prepared for such shocks, the article notes. In December, Ukraine increased its electricity import capacity from the EU by nearly a quarter – to 2.1 GW.
The second issue, and the most acute, is the labor shortage. Since 2022, mobilization, migration, and the war have led to a reduction in the workforce by more than one-fifth, down to 13 million people.
Another challenge is the lack of funds. Small farms and businesses struggle to borrow enough money to finance their operations. Long-term capital investments are nearly impossible. The state is spending more than it receives in the budget, The Economist points out. In 2025, its budget deficit is projected to be around 20% of GDP. However, almost the entire deficit – $38 billion – will be financed from external sources.