Battered and Strained by War, Ukraine’s Economy Adapts to Survive
After 10 months of Russian destruction, Ukraine’s economy shrank by 30 percent. But companies have packed up and moved, switched products and found support abroad.
The country’s economy shrank by 30.4 percent in 2022, its economy minister said Thursday, the largest decline since Ukraine declared independence from the Soviet Union in 1991.
“It’s easier to say what we lost” than what survives in Ukraine’s economy, said Hlib Vyshlinsky, the executive director of the Centre for Economic Strategy, a think tank in Kyiv.
But economic activity in Ukraine has become “much more agile” to adapt to wartime. Ukrainian farmers, for example, have continued to plant and harvest crops despite the threat from Russian rockets and land mines, and have adapted planting to cultivate more in-demand crops, like corn.
The industrial sector has adapted, too. Factories producing everything from mattresses to trucks have relocated from cratered regions of the east to the relative safety of Ukraine’s western frontier.
Hundreds of plants that had been in Russian-occupied areas were packed up in the summer and moved on trains and trucks to Ukraine’s west. Outside the city of Lviv, close to Poland — Ukraine’s gateway to Germany and western Europe — many of the reborn businesses are forging ties with the European Union, which Ukraine hopes to join soon.
Ukrainian tech start-ups are writing software for foreign companies and now have direct lines to major companies in Europe and the United States, where many want to help Ukraine through the war.
Thousands of Ukrainians displaced by war have also set up as entrepreneurs elsewhere in the country to try to forge new lives and add to the local economy. Even restaurants have adapted: Many have stayed open for business despite power outages through innovations like “candlelight menus,” or meals that don’t require cooking.
“Ukrainians are resilient,” said Mr. Vyshlinsky, the think tank director. During blackouts in the capital, he said, the soundtrack of a walk through the city is an “orchestra of power generators.”
Yet Russia’s destruction of critical infrastructure has dealt Ukraine a setback heading into the second year of the war. The path of Ukraine’s economy this year will depend heavily on the ability to keep electricity flowing, limiting the length of blackouts and the need to ration power, according to Mr. Vyshlinsky.
He forecasts economic growth to be flat this year — a less optimistic outlook than many forecasters, but also not as pessimistic as those who think that another big drop is in store.
The article was published on The New York Times.