Ukrainian Economy in War Times. November 2022

The Ukrainian armed forces managed to liberate from the occupiers the entire right bank of the Dnipro river, including Kherson. The first trains have already gone there; national companies are resuming their work – primarily the post office, telecommunications, and banks.

It will be more difficult for other spheres, including those that provide essential services. In retreat, the enemy stole or destroyed everything that it could. As the occupation lasted for some time, they managed to proceed significantly with this. In particular, electrical networks were damaged more than expected; thus, the restoration will take from two to three weeks.

In addition, the aggressor continued to destroy energy infrastructure throughout the whole territory of Ukraine. Over the past month, there have been several waves of massive missile strikes, each more powerful than the previous. And although the effectiveness of air defence is increasing, some missiles are reaching their targets.

Energy companies had to tighten consumption even more than before. But businesses and the public have shown remarkable resilience and have begun to adapt to the situation. Foreign partners also helped, both with money and directly with equipment.

Frequent power outages have already influenced business expectations and macro indicators. For the first time since the resumption of National Bank surveys, the Business Activity Expectations Index has declined in all four spheres — trade, industry, construction, and services.

According to preliminary data, the GDP in October decreased more than in the previous two months, which has already forced the authorities to revise the macroeconomic forecast for the current year.

Against this background, the extension of the Grain Deal for another 120 days, which was to expire on November 19, was enormous progress. Unfortunately, it did not work out with a more considerable extension – for a more extended period and with expansion to other ports – but the agrarians are grateful even for this format.

After all, grain exports in October approached the pre-war level because of the ability to transport products by sea. And the lack of port capacity was gradually offset by the expansion of the land routes capacity. It gives hope that the farmers will continue to sow their fields and that the following year’s harvest will be at least at the level of this year.

The research was conducted with the support of the German Economic Team. Conclusions in this paper are those of its authors and do not necessarily represent the views of the supporting organisation.