However, Uncertainty has intensified with the weakening of American supportespecially after the arrival of Donald Trump to power, who has expressed his skepticism about the continuity of financial and military support to Ukraine. This situation raises questions about the country’s economic future and his ability to recover in a stage without sustained help from his western allies.
The economic cost of war has been very important, affecting from industrial and agricultural production to employment and inflation. Millions of Ukrainians have been displaced, foreign investment has collapsed and the country has had to depend on international loans and donations to sustain their economy. What will happen in 2025?
Impact on infrastructure and productive sector
The destruction of key infrastructure has been one of the highest costs of war. Cities such as Mariupol, Bajmut and Severodonetsk have been practically razed, and the reconstruction of roads, bridges, hospitals and energy plants will require hundreds of billions of dollars.
According to World Bank estimates, the total cost of the reconstruction of Ukraine could exceed 400,000 million dollars, a figure that continues to increase as the war continues to destroy essential assets for the operation of the country.
The industrial and agricultural sector, fundamental pillars of the Ukrainian economy, have been seriously affected. Ukraine, one of the main cereal exporters in the world, has seen its limited exports due to the blockade of black sea ports and attacks on its logistics infrastructure.
Although agreements with Türkiye and the United Nations have allowed certain grain shipments, agricultural production has fallen into more than 30% compared to war levels.
The manufacturing industry has also suffered, with the destruction of factories and the Lack of investment in new projects due to uncertainty and the risk of bombing.
Public Finance and External Debt of Ukraine
The Ukrainian state budget has had to allocate huge sums of money to defense, reducing government capacity to finance other key sectors such as health, education and social programs.
In 2023, more than 50% of the national budget was allocated to military and security expenses. To cover this deficit, the country has depended on Loans of the International Monetary Fund (IMF), the World Bank and donations from the European Union and the United States. However, the growing external debt raises a significant challenge for the economic stability of long -term Ukraine.
The impact of the war on the national currency, the grivna, has also been severe. Inflation has reached 25%peaks, affecting the purchasing power of citizens. The National Bank of Ukraine has had to intervene repeatedly to stabilize the economy, but currency reserves have been compromised, limiting the country’s ability to sustain themselves without external support.
To this is added Loss of tax revenue Due to the destruction of companies and the fall of domestic trade, which has exacerbated the budget deficit.
Employment has also suffered
The conflict has caused One of the biggest humanitarian crises in Europe since World War II. Millions of Ukrainians have abandoned the country in search of refuge in Europe and other regions, reducing the workforce available and seriously affecting economic productivity. According to the United Nationsmore than 8 million Ukrainians have been displaceda huge challenge for the labor market and the country’s social welfare system.
In addition, the destruction of companies and instability have led to an increase in unemployment. Many sectors, especially trade, hospitality and manufacturing, have experienced mass layoffs. Although the government has tried to implement programs for labor reintegration and support for internal displaced people, resources are limited and uncertainty persists.
And what about reconstruction?
Despite the devastation, Ukraine seeks to lay the foundations for reconstruction. The Government has raised ambitious plans for post -conflict recovery, but its success will depend largely on international support and political stability. If Western aid decreases, as could happen in a scenario of lower commitment from the United States under the Trump administration, recovery could significantly slow down.
One of the main challenges will be to attract foreign investment in a country that still faces security risks. However, sectors such as renewable energy, technology and infrastructure reconstruction could become growth pillars if appropriate policies are implemented to promote investment. Integration with the European Union is also a way that the Ukrainian government seeks to consolidate, which could generate long -term economic opportunities.
The economic cost of the war in Ukraine has been colossal and continues to increase as the conflict extends. Is this decisive year for the Ukrainian economy?