Successfully investing in Ukraine

Ukraine's economy developed very positively until the outbreak of the war. The experts estimated that the economy will grow by more than 3 percent in 2022.

 

Russia's aggressive war on Ukraine has of course stopped this positive economic growth. After the war broke out, most of the companies went out of business. Many companies were destroyed by the attacks. The workers either fled or were drafted into the military. The important roads, bridges, ports and airports were destroyed. No foreign investors came into the country either. The national currency hryvnia is relatively robust and the feared total devaluation did not occur. The exchange rate has not changed significantly since the beginning of the war.

 

Food prices are increasing day by day, but there have been no shortages of supplies. The inflation rate is very high and in April 2022 it was almost 16 percent. Unfortunately, the end of inflation is not in sight. Prices will continue to rise until the end of the year. Of course, this has an impact on the buying mood of consumers. The purchasing power of the Ukrainian population has plummeted. It is estimated that over 6 million Ukrainians have left the country to date. Many entrepreneurs have great difficulty in continuing to pay the full salaries. There are almost no new jobs. 

 

The tax revenue in the state coffers has collapsed. The very high war costs put a strain on the budget very fast. Revenue collapsed for most companies in February and March as well.

 

In this context, it is understandable that a slump in GDP of between 30 and 40 percent is expected for 2022. These are of course only estimates, because it all depends on how long the war will actually last and how it will continue.

It is understandable that in the current situation, the investment climate in Ukraine is not good. Nevertheless, according to the survey conducted by the German-Ukrainian Chamber of Industry and Commerce in April-May 2022, the majority of companies were still dealing with security measures, crisis management and cost savings in April. The survey also revealed that the companies are already dealing with strategic reorientation, are looking for new sales channels and want to found new business areas.

 

One can only hope that the war in Ukraine will soon come to an end. If peace agreements are reached, Ukraine's GDP will grow rapidly in the next few years. The Ukraine would like to have closer ties to the EU and make rapid progress with the country's reconstruction. Many European countries already have promised Ukraine reconstruction aid. Ukraine is hoping for a relaunch of the Marshall Plan. If that happens, Ukraine and the Ukrainian economy will develop very quickly, which in turn means unlimited opportunities for investors: