Economic review in February 2025. Can Ukraine rely on its financial reserves to stabilize the front?
Research
| 13 February 2025
Since March 2022, the Centre for Economic Strategy (CES), together with the German Economic Team (GET), has been preparing monthly reviews of Ukraine’s economy during a full-scale war. All notes can be found under the link.
Key changes in the Ukrainian economy in February:
- Monetary, FX, and Banking sector: Key rate up to 14.5%, inflation hit 12.9%. FX reserves down to $43 bn, but hryvnia strengthened. Deposit growth & rise in UAH loans.
- Sectoral analysis: Power system stable despite shelling and cold weather, but the Rada takes a controversial step in purchasing Russian nuclear power plant reactors. Steel production hit a 5-month high; meanwhile, the industry could be impacted by U.S. protectionist measures. Grain & oilseed exports hit lowest level since 2023, and corn made up two-thirds of grain and oilseed exports by tonnage in January. Agricultural exports expected to decline by 26% in 2024/25: this is a result of low level of soil moisture, especially in Eastern regions. IT services exports in 2024 fell by 5% to $6.45 bn. December 2024 showed the highest monthly IT exports in 2023-2024.
- Fiscal sector: Revenues in January slightly outpace CPI y-o-y. VAT anomaly repeats, excise losses accumulate. State revenues cover only war costs. Defence and security expenses exceed 65% of the state spending.
- Special topic: ERA financing is a gamechanger for 2025. Ukraine will receive $50 bn backed by Russian frozen assets. Foreign financing in 2025 surpasses expected needs: can available resources be redirected to strengthen defense? The ERA funds must be used wisely, and a safety margin must be maintained for 2026-2027.
See our presentation for further details. The panelists were:
- Andriy Zahorodniuk, Chairman of the “Centre for Defense Strategies”, former Minister of Defense of Ukraine (2019-2020);
- Volodymyr Tsabal, Secretary of the Budget Committee of the Verkhovna Rada of Ukraine;
- Mykola Bielieskov, Senior Analyst at CBA Initiatives Center;
- Lyubov Shipovich, co-founder of Razom for Ukraine, founder of Dignitas Foundation;
Moderator: Hlib Vyshlinsky, Executive Director of CES.
Media partner: Ekonomichna Pravda.
