Ukraine has achieved notable milestones, with its economy outpacing Russia’s in several key respects for the first time since the full-scale invasion began in 2022, The Economist reported on December 18.
Ukraine’s central bank projects GDP growth of 4% in 2024 and 4.3% in 2025. Its currency remains stable, and interest rates, at 13.5%, are near their lowest in 30 months.
In contrast, Russia is grappling with soaring interest rates expected to reach 23% to stabilize its faltering rouble. Russia’s GDP is forecasted to grow by only 0.5-1.5% in 2025.
However, Ukraine faces pressing challenges, including energy shortages, labor constraints, and financial instability.
In the face of adversity, Ukrainian companies have shown resilience. For example, Naftogaz, a state-owned energy firm, transitioned from a $2.4 billion loss in 2022 to a profit of $658 million in the first half of 2024.
Even as Russia terminated the grain deal in July 2023, Ukraine maintained exports through its self-established maritime corridor, supported by drones and missile defense. These strategies, coupled with Western aid, have kept Ukraine’s economy afloat.
One of the persistent challenges stems from Russian attacks on Ukraine’s power grid, which have reduced electricity generation capacity by nearly half. Despite this, the country has implemented effective coping strategies and ongoing repairs. These measures are expected to limit the average power deficit to just 6% of total demand in 2025 and 3% in 2026, according to Andriy Pyshnyi, the governor of Ukraine’s central bank.
However, the country become better equipped to counter such shocks. In December it expanded its electricity-import capacity from the EU by almost a quarter, to 2.1Gw.
In addition to addressing power shortages, Ukraine continues to manage its financial needs with international support.
The country’s survival without American funds in 2025 appears feasible. Dimitar Bogov of the European Bank for Reconstruction and Development notes that together with an €18bn tranche previously agreed upon by the EU and contributions from other G7 members, the gap left by the absence of US funding could be effectively bridged.
Earlier, Ukraine signed agreements with the World Bank for nearly $600 million in funding as part of a new initiative aimed at supporting sustainable economic growth and the development of small- and medium-sized enterprises.
-924c3c302c27387e19f6c44aaeb98745.png "Maryna Kulakova")
-21d0b63c17f6020e4df75f6c6f9a2f4f.jpg "Ivan Khomenko")
