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.

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After years of political and economic tension, the Ukrainian economy had started to stabilise, but the outbreak of COVID-19 in 2020 and then Russia’s invasion in February 2022 pushed it in recession. After renewing with positive growth in 2021 (+3.4% GDP), Ukraine’s economy contracted by an estimated -35% GDP (IMF), due to massive infrastructure destruction, disruption of agriculture, industry and trade, large capital outflows and an exodus of workers (The Economist Intelligence Unit). The government called on Ukrainian citizens to resist and received international support but Russia’s determination suggests further escalation. In these circumstances, no GDP forecast is available for 2023.

In 2022, Ukraine’s economy was still recovering from the consequences of the COVID-19 pandemic when it suffered from the devastating attack from Russia. The IMF and the World Bank issued a join statement condemning the offensive and ensuring Ukraine for their support. The IMF responded to Ukraine’s request for emergency financing through a possible Rapid Financing Instrument; and the World Bank started to prepare a USD 3 billion package of support (including the mobilization of financing from several development partners) comprising fast-disbursing budget support operation and fast-disbursing support for health and education (IMF). The protracted war had a devastating social and economic impact on Ukraine. In addition tof numerous civilian casualties, over a third of the population has been displaced, access to basic needs such as electricity, water, and heating is at risk, and housing, infrastructure, and productive capacity suffered from massive destruction (IMF). The authorities managed to maintain macroeconomic and financial stability, but public finances are under extreme pressure (IMF). According to Coface data, the budget deficit soared from -4% GDP in 2021 to -23.9% GDP in 2022, and public debt rose from 50.7% GDP in 2021 to 80% GDP in 2022. Inflation increased from 9.4% in 2021 to 20.6% in 2022 (IMF), and could reach 28% in 2023 according to Ukrainian authorities forecast. In December 2022, the IMF approved a 4-month Program Monitoring with Board Involvement (PBM, the first arrangement of its kind), designed to help Ukraine maintain economic stability and catalyze donor financing amid very large balance of payment needs and exceptionally high risks (IMF). Key measures under the PMB include enhancing revenue mobilization and reviving the domestic debt market, preparing a financial sector strategy, and enhancing transparency and governance (IMF). Since Russia’s invasion, the government is focused on organising the resistance and gathering political and logistical support from the international community. Intended to help bring victory against Russia, Ukraine’s 2023 Budget planned a record deficit of USD 38 billion. It gives priority to the armed force and national security, and also covers pensions, healthcare and education. The U.S. 2023 budget also allocated USD 44.9 billion for aid to Ukraine.

Ukraine's unemployment rate was falling until 2019, but due to the negative economic impact of the COVID-19 pandemic, it is estimated to have increased to 9.8% in 2021 and was forecast to stay high before the start of the war (IMF). The informal sector in Ukraine is estimated to account for a third of the country's GDP, and GDP per capita (at purchasing power parity) is only 20% of the EU average. The human cost of the war with Russia is still unknown but already, hundred of civilians have been killed, hundreds of thousands refugees have fled the country, and supply chains disruption have triggered food shortages.

Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 156.57200.16151.50148.710.00
GDP (Constant Prices, Annual % Change) -3.83.4-30.3-3.00.0
GDP per Capita (USD) 3,7804,8824,3494,6540
General Government Balance (in % of GDP) -5.1-
General Government Gross Debt (in % of GDP) 60.548.881.798.30.0
Inflation Rate (%) 2.79.420.221.10.0
Unemployment Rate (% of the Labour Force) 9.29.824.520.90.0
Current Account (billions USD) 5.17-3.258.60-6.530.00
Current Account (in % of GDP) 3.3-1.65.7-4.40.0

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

The agricultural sector plays a major role in Ukrainian economy. In 2021, it contributed to 10.6% of the GDP and employed 14% of the working population (World Bank). The main crops are cereals, sugar, meat and milk. Ukraine is the world's fifth largest exporter of grain. The European Union has reduced its customs duties on the agricultural areas of Ukraine, which could be a boon for this sector. The country is rich in mineral resources, mainly iron and magnesium, as well as in energy resources (coal and gas).
The secondary sector employs a quarter of the active population and accounts for 23.5% 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.
The service sector employs 61% of the workforce and contributes to 51.8% 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. However, in the context of tensions with Russia, Ukraine’s role as the main transit corridor has diminished, with Russia seeking alternative routes (to the south via Turkey and to the north via Germany). The transit contract between Gazprom and Naftogaz Ukrainy, which expired on December 31, 2019, has been extended for a period of five years, but in the context of the war, supplies have been greatly reduced.

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) 13.8 25.0 61.2
Value Added (in % of GDP) 10.6 23.5 51.8
Value Added (Annual % Change) 14.4 2.6 3.1

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

See the country risk analysis provided by Coface.

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Latest Update: November 2023

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