Market Update: Visit Ukraine – Ukraine’s economy during the war: how is business adapting and growing despite the hostilities? – Full Analysis

Despite the full-scale war, the Ukrainian economy is showing steady growth, with the defence sector and technology start-ups becoming new drivers of development. At the same time, the country continues to suffer massive economic losses and remains dependent on international financial support. Learn more about how Ukrainian businesses are adapting to the realities of war and which sectors are ensuring the country’s economic stability

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The Ukrainian economy continues to operate and develop even in the midst of a full-scale war. The defence sector is expanding its capabilities, GDP is showing steady growth, and technology start-ups are creating world-class innovative solutions, according to Finance.ua, citing the Financial Times. At the same time, the country faces massive economic losses, dependence on Western aid, and the long-term consequences of destruction.

How Ukrainian businesses are adapting to the realities of war, which sectors are growing, and which challenges remain the most acute — we discuss this further in the article.

Ukraine’s GDP growth during the war: forecasts and actual figures

Russia’s full-scale invasion caused a sharp decline in production in 2022, but a complete economic collapse or banking crisis was avoided. Since then, Ukraine’s gross domestic product has been growing annually. According to the National Bank’s forecasts, growth will be 1.8% this year, with acceleration expected in 2027–2028. Dimitar Bogov, an economist at the European Bank for Reconstruction and Development, described this dynamic as stable, given the extremely difficult circumstances in which the country finds itself.

At the same time, real GDP remains 21% below 2021 levels and more than 40% below early 1990s levels. Last year, the current account deficit reached almost 15% of GDP, and the projected inflation rate for 2026 is 7.5%. The main drivers of growth remain sectors directly related to defence and government spending. In other words, the positive GDP dynamics are still limited and largely depend on military needs.

Ukraine’s defence industry: ramping up production in wartime

One of the most striking examples of business adaptation to the realities of war is the company Ukrainian Armour. In 2022, the company lost two production facilities in the temporarily occupied part of the Zaporizhzhia region, but managed not only to resume operations, but also to significantly increase its capacity. The company’s CEO, Vladislav Belbas, said that since last year, Ukrainian Armour has been producing NATO-calibre artillery shells, and the annual state contract for the supply of mortars was fulfilled in just six months.

According to Belbas, production volumes have grown so much that the Ukrainian budget cannot always afford to purchase everything that domestic manufacturers offer. This example illustrates a general trend: the defence sector has become a powerful economic cluster that generates jobs, attracts investment and stimulates related industries. It is the ability of defence companies to quickly scale up production that has surprised both Ukraine’s partners and its opponents.

Military technology and start-ups in Ukraine: drones, AI and robotics

The Financial Times pays particular attention to the technological ecosystem that has formed around the needs of the front line. Dozens of Ukrainian

startups are developing ground robots to supply frontline units, electronic warfare systems to combat Russian drones, and artificial intelligence modules that allow drones to perform tasks and strike targets autonomously. The speed of technological innovation in Ukraine, especially in the field of drone development, has come as a surprise to international observers.

This technological transformation is significant not only for the battlefield. Analysts note that military technological developments could become a serious economic advantage even after the war ends. The experience, expertise and products created by Ukrainian engineers in extreme conditions have the potential to be commercialised on international markets. In fact, Ukraine is forming a new high-tech industry capable of compensating for losses in traditional sectors.

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Economic damage from the war in Ukraine: scale of losses and dependence on aid

Despite positive dynamics in certain sectors, the overall scale of economic damage remains enormous. Fighting has engulfed much of the east and south of the country — regions where the most fertile agricultural land and heavy industry centres are concentrated. Exports from key industries — agriculture and metallurgy — have declined significantly, and millions of citizens have left the country, putting additional pressure on the labour market and domestic demand.

Budgetary support from the West, in particular the European Union and the International Monetary Fund, continues to play a key role in ensuring the functioning of the public sector. Maksym Samoilyuk, an economist at the Kyiv Centre for Economic Strategy, noted that without this support, the Ukrainian economy would most likely have collapsed or, at the very least, would not have demonstrated such a level of resilience. Analysts also warn that the consequences of the war will be felt for decades after it ends, making the issue of reconstruction and structural reforms extremely relevant right now.

Doing business in Ukraine during the war requires an understanding of numerous legal nuances, from changes in tax legislation to the specifics of executing government contracts and protecting assets. The Visit Ukraine portal provides professional legal advice for entrepreneurs who want to develop their business in the current conditions. Experienced specialists will help you understand regulatory requirements, assess risks and find the best solutions for your business.

Request a consultation with a lawyer on the Visit Ukraine portal and get qualified support on all business issues!

Reminder! Mass power outages are changing the usual rhythm of life and business operations throughout Ukraine. Shops, pharmacies, banks and services are adapting to autonomous operation, but even generators have their limitations, which customers are feeling. How Ukraine is learning to work during power outages — find out more at the link.

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