Ukraine Economic Outlook 2022

General information

  • Active combat continues in many regions of Ukraine. Civilian casualties are rising, and infrastructure and production facilities continue to be destroyed. Russia’s large-scale assault on Ukraine has also broken production ties between regions and caused a major increase in forced migration. As a result, losses from the war will be significant.
  • According to the NBU’s baseline estimates, real GDP could drop by at least one third in 2022. All GDP components are expected to decline. More specifically, private consumption will contract on the back of the forced relocation of many Ukrainians to other countries, higher unemployment, lower income and decreased spending on non-essential goods. Investment activity will also decline markedly in the wake of considerable uncertainty and high risks. Investment company Dragon Capital predicts that if the war continues until the end of the year, we should expect a decline in Ukraine’s economy by 30%.
  • According to the calculations of the Ministry of Economy, only in the first quarter of 2022, Ukraine’s GDP decreased by 16% (in 2021, the Ukrainian economy grew by more than 3%).
  • Ukraine’s total losses from Russian aggression exceed $1 trillion, said Prime Minister Denis Shmygal in an interview with Interfax. He explained that such assessments consist of three parts:
  • — direct infrastructure damage, including military infrastructure and other civilian costs — more than $270 billion;- lost profits and investments — $290 billion;- losses incurred as a result of declining GDP in the run-up to pre-war plans.
  • According to the State Statistics Service, in the first quarter of the year exports of goods increased by 2.9% to $ 14.1 billion year on year, and imports amounted to $ 14.13 billion, which is 5.6% less than in the same period last year . Such figures are possible due to a significant excess of January and February last year, when the pandemic restrained international trade.
    In April this year, Ukraine exported goods worth $ 2.7 billion (in April last year, Ukrainian exports amounted to $ 5.4 billion). Particularly painful is the reduction in trade exports in two key areas: metallurgy and agricultural products.
  • In April, hostilities engulfed 6 oblasts, which together accounted for about 20% of GDP in the past (10 oblasts in March with more than 55% of GDP). The decline in economic activity was also observed in relatively calm regions due to disruptions in supply and production chains, uncertainty and increased risks, outflow of labor force and additional costs.
  • The number of enterprises that have completely ceased operations has almost halved since the start of war (from 32% down to 17%). However, 60% of enterprises work below the pre-war capacity utilization level, almost 23% — work more than twice lower.
  • According to the Finance Minister of Ukraine, the country has been forced to spend 245.1 billion hryvnia ($8.3 billion)
  • The budget deficit widened to $ 3.1 billion in April, and revenues from regular sources are meager. In April, the country was able to cover only about 32% of general fund expenditures or UAH 54 billion with tax, customs and other regular revenues. Another 13% was covered by grants and the remaining 54% by borrowings. Ukraine had received almost $2 billion in external funding in April, of which $719 million had come from grants. The figure for the period since February stands at $5.4 billion, including $801 million in grants.
  • It is estimated the receipt of revenues in May-June at the level of 45-50% of (what was) planned, provided that the situation does not worsen.
  • In April 2022, consumer inflation accelerated in annual terms, to 16.4%, up from 13.7% in March. In monthly terms, prices grew by 3.1%. The main factors accelerating inflation were supply chain disruptions, increased costs of doing business, unevenly distributed demand and supply of goods across regions, and the loss of companies’ assets to the destruction wrought by russia’s full-scale assault.  By the end of the year, prices are expected to rise by more than 20%.
  • In January–March 2022, banks reported UAH 0.16 billion in losses due to a net loss of UAH 10.07 billion incurred in March. As previously reported, the net profit of the banking sector in January–February was UAH 9.91 billion. The general slump in economic activity and a fall in demand for loans and banking services will continue to have an adverse impact on banks’ profitability. Credit risk losses are expected to rise in view of the gradual effects of the economic crisis on borrowers’ activity. The impact of the war can therefore only be assessed over time.


  • Agriculture. Currently, the government expects sown areas to be 80% of the area in 2021. The government has launched a special soft loan program to help the sector fund the campaign. According to the State Statistics Service of Ukraine, in January-February 2022 agricultural exports amounted to $5.676 billion, and in March-April, after the Russian invasion, only $1.744 billion, having decreased during the war more than three times.
  • Ferrous metallurgy. Metallurgy has lost at least 30% of its assets. Enterprises in the Donetsk region continue to suffer significant losses. At the same time, plants in other regions began to resume production. To further promote Ukrainian exports, Canada, the European Union, the United Kingdom and the United States have abolished tariffs and quotas for Ukraine, including on metallurgical products. According to the State Customs Service, metallurgical enterprises of Ukraine in January-April 2022 reduced revenues from exports of ferrous metals by almost a third (29.7%) compared to the same period last year — up to $2.62 billion. Total export revenues also decreased — from 19.5% in January-April 2021 to 15.65% this year.
  • Fuel and energy. The enemy continues to attack refineries, fuel depots and even some gas stations with long-range missiles. Along with logistical problems and the sowing campaign, this has led to acute fuel shortages and rising retail fuel prices.
  • Maritime transportation. According to experts, Ukraine is losing $170 million a day due to blocked seaports. The war affected all 13 Ukrainian ports. Ukrainian ports are not working due to occupation, blockade, mine danger and the danger of piracy by Russia. Only the river ports of Ust-Dunaisk, Izmail and Reni on the Danube are the only operating ports. Inland waterways on the Dnieper River have been suspended due to the occupation of the Kakhovka Gateway.
  • Rail transportation. Railway became the main mode of transport for Ukraine during the war. In April, Ukrzaliznytsia transported 9.15 million tons of goods, of which 3.9 million tons were for export. However, due to the increase in traffic, the main freight hubs do not cope with the increased load when crossing the border: the queue of railway cars is more than 20 days.

Direct losses

“Russia will pay” project by the KSE Institute (May 19, 2022)

  • As estimated by the Ministry of Economy of Ukraine and the Kyiv School of Economics (KSE), the overall Ukraine’s economic losses due to the war, taking into account both direct losses calculated in this project and indirect losses (GDP decline, investment cessation, outflow of labor, additional defense and social support costs, etc), range from $564 billion to $600 billion.
  • As of May 19, the total amount of direct documented infrastructure damages, based only on public sources, is $97.4 billion.
  • As of May 19, 38.6 million square meters of housing stock were destroyed or damaged. The total amount of this damage has reached $33.9 billion.
  • The total losses from destruction and damage to industrial enterprises amount $10.7 billion. Since the beginning of the war 219 plants, factories, and enterprises have been destroyed, damaged, or seized.
  • Since the beginning of the war 1067 educational institutions were damaged and destroyed. The damage caused to educational facilities is almost $1.5 billion.
  • According to the latest estimates within the project «Russia will pay», at least 94.5 thousand private cars were destroyed, damaged, or seized.
  • Since the beginning of Russia’s war against Ukraine, at least 12 civilian airports, 295 bridges and bridge crossings, 591 kindergartens, 574 healthcare institutions, 108 religious and 179 cultural buildings, 169 warehouses and 19 shopping malls.

International reports

EBRD Report (publication date: May 2022)

  • Under this unprecedented level of uncertainty, Ukraine’s GDP is expected to decline by 30% in 2022 to be followed by an increase of 25 per cent in 2023 on the assumption that massive reconstruction efforts will be able to take place. The forecast is sensitive not only to the duration of the war, but also to the post-war geopolitical situation, the robustness of reconstruction efforts and the extent of return of refugees.
  • It is estimated that between 30 and 50% of businesses have stopped their operations completely, causing about half of all employees to lose their jobs and income. Approximately 10 % of the pre-war population has fled Ukraine and an additional 15% are displaced within the country.

IMF Report (publication date: April 2022)

  • For Ukraine, all projections for 2022–27 except Real GDP are omitted due to an unusually high degree of uncertainty. Real GDP is projected through 2022.
  • Although precise measures of the damage to the Ukrainian economy are impossible to obtain, the war will cause a very severe contraction. For 2022, the Ukrainian economy is expected to contract by 35%. And even if the war were to end soon, the loss of life, destruction of physical capital, and flight of citizens will severely impede economic activity for many years to come.
  • The war in Ukraine will amplify economic forces already shaping the global recovery from the pandemic. The war has further increased commodity prices and intensified supply disruptions, adding to inflation.
  • The war in Ukraine has led to extensive loss of life, triggered the biggest refugee crisis in Europe since World War II, and severely set back the global recovery. Global growth is projected to decline from an estimated 6.1% in 2021 to 3.6% in 2022–23—0.8 and 0.2 percentage points lower than in the January forecast, respectively.

WB Report — Europe and Central Asia Economic Update (publication date: April 10, 2022)

  • Ukraine’s economy is expected to shrink by an estimated 45.1% this year with a weak recovery thereafter, although the magnitude of the contraction will depend on the duration and intensity of the war. This is predicated on massive declines in imports and exports given trade disruptions, a collapse in public and private investments and a large drop in household spending reflecting the large displacements of people, loss of incomes and livelihoods.
  • The poverty and social impacts of the war will be massive. Simulations using the most recent macroeconomic projection show that the share of the population with incomes below the actual Subsistence Minimum (the national poverty line) may reach 70% in 2022, up from 18% in 2021. In the absence of a massive post-war support package, this indicator would still be higher than 60% by 2025.
  • Based on the international upper middle-income poverty line (US$5.5 a day), poverty is projected to increase to 19.8% in 2022, up from 1.8 percent in 2021, with an additional 59% of people being vulnerable to falling into poverty.