The economic consequences of military conflicts: The Ukrainian context

Polinke ych, Oksana
A icle
The economic consequences o mili a y con lic s: The
Uk ainian con ex
Economic Fo um
P o ided in Coope a ion wi h:
Lu sk Na ional Technical Uni e si y
Sugges ed Ci a ion: Polinke ych, Oksana (2024) : The economic consequences o mili a y con lic s:
The Uk ainian con ex , Economic Fo um, ISSN 2415-8224, Lu sk Na ional Technical Uni e si y, Lu sk,
Uk aine, Vol. 14, Iss. 1, pp. 28-39,
h ps://doi.o g/10.62763/cb/1.2024.28
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/318681
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In oduc ion
In he con ex o a sus ainable de elopmen economy,
ac o s con ibu ing o he g ow h and o ma ion o
socially esponsible businesses a e o signi ican im-
po ance. Mili a y con lic s, c ises, and pandemics ha e
a de imen al impac on hese p ocesses. The mili a y
con lic in Uk aine has nega i e consequences no only
o he coun y’s economy bu also o he economies o
neighbo ing s a es and he EU as a whole. The e o e, he
p oblems caused by he mili a y con lic in Uk aine and
The economic consequences o mili a y con lic s: The Uk ainian con ex
Oksana Polinke ych*
Doc o o Economic Sciences, P o esso
Lu sk Na ional Technical Uni e si y
43018, 75 L i ska S ., Lu sk, Uk aine
h ps://o cid.o g/0000-0001-6924-7296
Sugges ed Ci a ion:
Polinke ych,O. (2024). The economic consequences o mili a y con lic s: The Uk ainian con ex . Economic Fo um, 14(1), 28-39.
doi:10.62763/cb/1.2024.28.
Copy igh © The Au ho (s). This is an open access a icle dis ibu ed unde he e ms o he
C ea i e Commons A ibu ion License 4.0 (h ps://c ea i ecommons.o g/licenses/by/4.0/)
*Co esponding au ho
Abs ac . Con lic , as a unique o m o in e ac ion in ol ing he clash o in e es s be ween pa icipan s in social
ela ions, se es as a necessa y condi ion o he de elopmen o ci ilisa ion. Con adic ions ha e accompanied
humani y h oughou i s his o y, inding e lec ion in he li e a u e, a , and his o y o a ious coun ies and
peoples. The eme gence and p og ession o any con lic ha e economic consequences, s emming om he
objec i e con on a ion be ween opposing o ces. The mode n economic landscape is inc easingly cha ac e ised
by deepening dispa i ies and a sh inking gap be ween c ises and con lic s. The pu pose o his a icle is o iden i y
he pe iods ha ha e impac ed Uk aine’s economy and o analyse he economic consequences o hese pe iods.
The au ho posi s ha he mili a y pe iod has had a de imen al e ec on Uk aine’s economy. To achie e his goal,
he esea ch employs me hods such as scien i ic abs ac ion, gene alisa ion, syn hesis, analysis, compa ison, as
well as g aphical and abula me hods o da a in e p e a ion. This app oach has allowed he iden i ica ion o
h ee main pe iods o con lic in Uk aine: he b ewing con lic in Eas e n Uk aine (2013-2014), he pandemic pe iod
(beginning in 2019), and he mili a y pe iod (s a ing in 2022). Fo each o hese s ages, he economic de elopmen
p ocesses in Uk aine we e analysed. I is no ed ha con lic s a e inhe en ly dange ous, posing h ea s no only o
he so e eign go e nance o e i o ies bu also o he economy o Uk aine and he global economy a la ge. Based
on he analysis o Uk aine’s economic de elopmen scena ios wi hou he s a e o wa , he main ac o s ha would
con ibu e o economic eco e y in he ollowing a eas we e highligh ed: GDP, unemploymen a e, in la ion a e,
and he NBU’s key in e es a e. The p ac ical alue o his wo k lies in he iden i ica ion o h ee pe iods o mili a y
con lic s in Uk aine and he analysis o hei key consequences. This app oach helped o demons a e ha he wa
in Uk aine no only weakens he Uk ainian economy bu also a ec s he economies o neighbo ing coun ies. The
main economic losses o Uk aine du ing hese con lic s include he loss o human esou ces and he esul ing
egional de elopmen dispa i ies
Keywo ds: en e p ise; socially esponsible business; c isis; losses; eloca ion o en e p ises; social wel a e
ECONOMIC FORUM
Jou nal homepage: h ps://e- o um.com.ua/en
Vol. 14, No. 1, 2024, 28-39
A icle’s His o y: Recei ed: 29.08.2023 Re ised: 10.11.2023 Accep ed: 28.12.2023
UDC 339.977 DOI: 10.62763/cb/1.2024.28
he ongoing wa a e inc easingly ele an and equi e
immedia e esolu ion, as hey unde mine Eu ope’s eco-
nomic esilience.
The ele ance o his esea ch is u he unde sco ed
by he asse ion made in J.M.Keynes(1920) s udy ha
p olonged wa s impose signi ican cos s on socie y and
he s a e. The wa in Uk aine can be cha ac e ised as a
hyb id con lic , beginning in 2013 du ing he Eu omaidan
and escala ing in 2014 du ing he Re olu ion o Digni y.
Polinke ych
Economic Fo um, 2024, Vol. 14, No. 1
29
N. S ukalo & A. Simakho a (2018) no ed ha he
social dimension o he mili a y con lic in Uk aine a -
ec s Eu opean s abili y and he geopoli ical si ua ion,
pa icula ly in ela ion o Uk ainian mig a ion. The c isis
in Uk aine has gene a ed nume ous social challenges,
such as loss o human li es, mass mig a ion, ising c ime
a es, unemploymen , and nega i e impac s on ci il soci-
e y and socialisa ion p ocesses. These p oblems also a -
ec Eu opean coun ies. Tha is why he EU is in e es ed
in dialogue and seeks o end he wa in Uk aine.
Acco ding o V. Sehn e al. (2022), he economic
consequences o global ca as ophes a y signi ican ly
ac oss coun ies. J.Fede lee al.(2022) also ound ha
he e ec s o global ca as ophes a e no e enly dis ib-
u ed wo ldwide. V. Sehn e al. (2022) emphasise ha
hese consequences di e subs an ially be ween coun-
ies, wi h geog aphic p oximi y o he coun y a wa
being a c i ical ac o . The close a coun y is geog aphi-
cally o Uk aine, he mo e p onounced he decline in i s
s ock ma ke a ound he ime he wa began.
The au ho A.C.C.S.M. Es e es (2023) no ed, ha
Russia managed o a e a inancial c isis, a oid signi -
ican impac s on he eal economy, and ind al e na i e
impo ou es, he eby minimising he e ec s o sanc-
ions. He sugges s ha his si ua ion can be add essed
h ough he isola ion o Russia, he enhancemen o
mul ila e al coope a ion, and he mo e e ec i e appli-
ca ion o sanc ions by closing loopholes and p e en ing
ci cum en ion.
The pu pose o his s udy was o delinea e he pe-
iods o con lic si ua ions in Uk aine, du ing which he
economy unde wen changes, and o highligh he eco-
nomic consequences o hese pe iods.
The objec i es o he a icle a e achie ed by ad-
d essing he ollowing asks:
1) di e en ia ing be ween he concep s o losses
and damages esul ing om he wa ;
2) assessing he a med con lic in Uk aine in he
Donbas egion and he wa wi h Russia in 2022;
3) iden i ying he pe iods o con lic escala ion in
Uk aine, aking in o accoun hei iming and speci ic
cha ac e is ics.
Ma e ials and Me hods
To achie e he objec i es o his s udy and add ess he
asks se o h, he ollowing esea ch me hods we e
employed: scien i ic abs ac ion, c i ical analysis o li -
e a u e sou ces, and gene alisa ion. The me hod o sci-
en i ic abs ac ion was used o iden i y he essence and
s uc u e o he wa ’s consequences, allowing o he
de elopmen o a me hodology o measu e hem. Gen-
e alisa ion enabled he sys ema isa ion o he collec ed
in o ma ion and he iden i ica ion o h ee key pe iods
in he de elopmen o Uk aine’s economy. Fo a mo e
de ailed analysis o he hyb id wa in Donbas om 2013
o 2021, me hods o compa ison and analysis we e ap-
plied. These me hods allowed o he cha ac e isa ion
The esea ch o Yu.Yu ki (2022) allows o a gene alisa-
ion ha he wo wo ld wa s se e as examples o “eco-
nomic ails”. Ge many’s de ea in Fi s Wo ld Wa was
d i en by economic p oblems a he han mili a y ail-
u e. In 1918, a esou ce de ici nega i ely impac ed he
economy, leading o he Re olu ion and he Compiègne
A mis ice. Du ing Second Wo ld Wa , B i ain, Ge many,
I aly, Japan, and he o me USSR we e hea ily depend-
en on he supply o aw ma e ials and inished indus-
ial p oduc s. The wa ime economy becomes ocused
on mee ing mili a y needs, leading o he dep ecia ion
o labou , p opaganda e o s, and he mobilisa ion
o he popula ion o mili a y and indus ial pu poses.
L.Cuie al.(2023) no ed ha he Russian-Uk ainian
wa has heigh ened he isk o dis up ions in he global
ene gy supply chain. The in e up ion o ade will sig-
ni ican ly impac Uk aine’s economy, causing a 4.18%
decline in i s eal GDP. Howe e , i he Uni ed S a es and
he Eu opean Union cease impo ing ene gy esou ces
om Russia, he la e ’s economy will su e a de as a -
ing blow, wi h a maximum eal GDP decline o 5.49%.
The scien is s D.Raw anie al.(2022) a gue ha he
Russian-Uk ainian wa , ex eme wea he e en s, and
he COVID-19 pandemic a e h ee ca as ophic e en s
cu en ly con on ing humani y, and ha he wa will
exace ba e he ad e se e ec s o ex eme wea he on
human socie y.
W.Boungou & A.Ya ié(2022) analysed he impac
o he Russian-Uk ainian wa on he s ock ma ke s o 94
coun ies and ound ha he con lic nega i ely a ec ed
s ock ma ke s in bo h coun ies bo de ing Russia and
Uk aine and hose al eady a ec ed by p e ious Russian
agg ession.
I.Liadzee al.(2022) employed he global econome -
ic model (NiGEM) o analyse he po en ial impac o he
Russian-Uk ainian wa om a ious pe spec i es. They
con i med ha he nega i e e ec s o he wa will no
only plunge inancial ma ke s in o u moil and cause en-
e gy and ood p ices o ise, bu also lead o a 1% decline
in global GDP and a 1-2% inc ease in in la ion.
M.A.R.Es ada & E.Kou onas(2022) condemn Rus-
sia’s in asion o Uk aine and e alua e he e ec i eness
o EU sanc ions agains Russia. These sanc ions ha e
led o educed liquidi y in Uk ainian banks, a empo-
a y de alua ion o he uble, a decline in ade due o
he suspension o ope a ions by o e 750 in e na ional
companies in Russia, and a sha p dec ease in p oduc-
ion caused by sho ages o aw ma e ials and limi ed
access o spa e pa s and supplies. The au ho s p opose
a model o assess he economic consequences o mili-
a y agg ession by analysing he impac o ade on he
s uc u e o in e na ional ade and economic de elop-
men ( ade supp ession index and educed in es men
as a esul o wa ) and he in e dependence o ade and
in es men (ag icul u al expo s, indus ial and man-
u ac u ing expo s, se ice expo s, and o eign di ec
in es men lows).
The economic consequences o mili a y con lic s...
Economic Fo um, 2024, Vol. 14, No. 1
30
o changes in Uk aine’s key mac oeconomic indica o s
du ing his pe iod. Speci ically, he s udy examined GDP
g ow h a es om 2021 o 2024, he numbe o people
who le Uk aine, and he ex en o damage o ci ilian
in as uc u e. By using he da a ex apola ion me hod,
a linea model o GDP g ow h in Uk aine o 2021-2024
was cons uc ed, which enabled o ecas s o u u e
pe iods. C i ical li e a u e analysis and g aphical me h-
ods we e used o iden i y he nega i e economic conse-
quences o he hi d mili a y pe iod in he de elopmen
o Uk aine’s economy. The li e a u e e iew in ol ed he
use o pe iodic sou ces, as p esen ed in Table1.
Table 1. Analysis o li e a u e sou ces on da a analy ics
Sou ce Analy ical da a used o he s udy
Jus abou he economy (based on he In la ion Repo o
Janua y, 2022) (2022) Analysis o he numbe o IDPs who do no plan o e u n
home
Reloca ion p og am… (2022) The p og amme o en e p ise eloca ion is desc ibed
The Wo ld Bank es ima ed he inancial loss o Uk aine om
he Russian in asion a $60 billion (2022) Analysis o Uk aine’s inancial losses incu ed du ing he wa
D.Schwa z (2022) Pe o mance o eloca ed companies du ing business
eloca ion
Yu.Melny ska (2022) Companies ha ha e s a ed wo king unde he business
eloca ion p og amme
O.Polinke ych & R.Kamiński (2018) An e ec i e model o co po a e image o business en i ies
Sou ce: de eloped by he au ho
The abo e sou ces p esen he opinions on he
e en s in Uk aine ha occu ed du ing he wa . The
g aphical me hod helped o isualise changes in eco-
nomic indica o s, which helped o clea ly unde s and
he ex en o he wa ’s impac on he coun y’s econ-
omy. An a emp was made o co e he en i e pe iod
o change, bu he ocus was on 2013-2022. The ma e-
ial o he s udy was collec ed om a ious sou ces,
including o icial da a published by he S a e S a is ics
Se ice o Uk aine, he Minis y o Finance o Uk aine,
he Na ional Bank o Uk aine, and he Cen e o Eco-
nomic S a egies. These da a p o ided a solid basis o
analysing mac oeconomic indica o s and he econom-
ic impac o he wa . Speci ically, he ollowing sou ces
we e used:
▣ O icial websi e o he Minis y o Finance o
Uk aine(2021);
▣ O icial websi e o he S a e S a is ics Se ice o
Uk aine(2024);
▣ O icial websi e o he Cen e o Economic S a -
egy(2024);
▣ O icial websi e o he Na ional Bank o
Uk aine(2024).
Resul s and Discussion
The consequences o wa di e signi ican ly om hose
o na u al disas e s. They s em om he des uc i e and
o he ad e se impac s on he economy, poli ics, and so-
cie y as a whole. In o he wo ds, he consequences o
wa a ec he socio-economic, poli ical, scien i ic, ech-
nological, and o he sphe es o ac i i y o indi iduals,
socie y, businesses, and he s a e. These a eas ha e un-
de gone changes and ha e been u he s ained due
o a med con lic s (wa s). The consequences o wa a e
measu ed in e ms o losses and damages. Losses a e
a po ion o he consequences ha a ise om nega i e
changes in key a eas o ac i i y (I ano ,2015). This e m
has a b oad meaning, e e ing o a ious de imen al
e ec s. In a na owe sense, i ela es speci ically o wa
casual ies, which can be ei he medical o i e e sible.
Damage e e s o he esul o nega i e changes due o
e en s, phenomena, o ac ions ha comp omise he
in eg i y o deg ade he p ope ies o an objec . These
include (I ano , 2015):
1)de ia ion in a pe son’s heal h om he a e age
le el, which can lead o illness o e en dea h;
2)dis up ion o no mal business ope a ions;
3)loss o a ious ypes o p ope y o o he alues,
which may be ma e ial, cul u al, his o ical, o na u al;
4)nega i e impac on he na u al en i onmen o
esiden ial a eas o people.
The mos common de ini ion o damage (ha m) is
he esul o changes in he s a e o objec s ha com-
p omise hei in eg i y o de e io a e o he p ope ies,
leading o ac ual o an icipa ed economic and social
losses due o mili a y e en s. Damages can be classi ied
as di ec , which a e measu ed in mone a y o physical
e ms, o indi ec . Indi ec damages include:
▣ dis up ion o he no mal unc ioning o he coun-
y’s economic sys em and businesses;
▣ wi hd awal o esou ces om ci cula ion;
▣ educ ion in he abili y o mee public needs;
▣ c ea ion o h ea s o he li elihood o he popula ion.
Figu e 1 illus a es he ela ionship be ween he
concep s o “consequences”, “losses”, and “damages”.
These e ms a e cha ac e is ic o wa .
Polinke ych
Economic Fo um, 2024, Vol. 14, No. 1
31
Globally, he e is a conce ning end o inc easing
equency and se e i y o a med con lic s, which nega-
i ely impac economic e iciency and na ional secu i y.
Di ec damage includes losses and ha m o all sec o s
o he na ional economy wi hin he a ec ed a ea, lead-
ing o i e e sible losses o ixed asse s and he deple-
ion o na u al esou ces. Consequen ly, businesses
ace educed p o i s, and he s a e su e s om lowe
ax e enues, insu ance payou s, and o he inancial
sho alls.
Damage can be ca ego ised as social, economic, and
en i onmen al, and i can be ei he di ec o indi ec . Di-
ec economic damage e e s o losses ha a e docu-
men ed and e i iable. Di ec social damage is measu ed
by he numbe o casual ies, inju ies, and people a ec -
ed by he wa , and i also has a psychological dimension,
linked o he loss o public us in he go e nmen ’s
abili y o ensu e p o ec ion and add ess social con lic s.
Di ec en i onmen al damage in ol es bo h ac ual and
po en ial losses ha can be quan i ied and include he
cos s associa ed wi h mi iga ing he impac on humans,
animals, plan s, ecosys ems, and na u al complexes.
These nega i e e ec s a ise om iola ions o en i on-
men al quali y s anda ds due o mili a y ac ions.
Indi ec en i onmen al damage e e s o he pollu-
ion caused by he des uc ion o en e p ises, leading
o he elease o ma e ials haza dous o public wel a e.
Indi ec damages a e he addi ional cos s incu ed o
compensa e o hese losses. These expenses a ise om
dis up ions and changes in economic connec ions and
in as uc u e, losses associa ed wi h mi iga ing nega-
i e e en s, and en i onmen al losses. Global changes
play a cen al ole in indi ec damage ac oss all a eas o
unc ioning, which canno be mone a ily quan i ied o
he cu en gene a ion.
To al damage is he sum o di ec and indi ec dam-
age, including he cos s o mi iga ing he consequenc-
es o wa . This damage is calcula ed a a speci ic poin
in ime and is no iden ical o o e all damage, which is
assessed quan i a i ely o he u u e. Damage can be
es ima ed by ollowing hese s eps (I ano ,2015):
▣ de e mining cu en p ices o goods, wo k, and
se ices;
▣ e iewing judicial p eceden s;
▣ conside ing insu ance expe ience (bo h pe sonal
and p ope y), which has a subjec i e assessmen basis
and a ied s a is ics.
Thus, con lic s lead o economic damage and losses.
A complex o m o wa a e is he a med con lic ha be-
gan in he Donbas egion in Ma ch 2014 and con inues
o his day. Howe e , nei he side in he con lic has o -
icially decla ed a s a e o wa . Such con lic s a ise om
egional s uggles wi h go e nmen s and ex e nal play-
e s. They a e dange ous as hey pose a h ea o so e -
eign con ol o e e i o ies. Le ’s examine how he main
mac oeconomic indica o s in Uk aine ha e changed
since he onse o he hyb id wa in Donbas and he an-
nexa ion o C imea (Fig.2).
Figu e 1. Co ela ion be ween consequences, losses and damages om wa
Sou ce: summa ised by he au ho acco ding o he esea ch S.V.I ano (2015)
Consequences o wa
Economic Social and Psychological Poli ical Ecological
Losses
Ma e ial Financial In o ma ional Medical and Biological
Damages
Di ec Indi ec
Social Economic Ecological Viola ion Abb e ia ion Elimina ion

The economic consequences o mili a y con lic s...
Economic Fo um, 2024, Vol. 14, No. 1
32
1466.2
1410.6
1586.9
1365.1
1988.5
1430.2
3560.6
3083.4
3978.4
3675.7
4194.1
3818.5
5459.6
4363.6
5191
3865.8
6537.8
5518.1
02000 4000 6000 8000
Nominal GDP, billion UAH
Real GDP, UAH billion
2023
2022
2021
2020
2019
2018
2015
2014
2013
3282
416.50
14014
513.52
14859
459.46
17445
477.03
04000 8000 12000 16000 20000
A e age mon hly sala y o employees,
UAH
A e age mon hly sala y o employees,
USD
100.5
7.88
124.9
11.9
143.3
21.84
109.8
27.2
104.1
25.85
105
26.96
110
27.29
126.6
32.34
105.1
36.57
020 40 60 80 100 120 140 160
In la ion index,%
A e age o icial exchange a e, UAH /
USD
2023
2022
2021
2020
2019
2018
2015
2014
2013
2023
2022
2021
2020
2019
2018
2015
2014
2013
Figu e 2. Changes in he main mac oeconomic indica o s
in Uk aine in 2013-2023 since he beginning o he a med con lic in Donbas
Sou ce: compiled by he au ho based on he da a O icial websi e o he Minis y o Finance o Uk aine (2021); O icial
websi e o he S a e S a is ics Se ice o Uk aine (2024)
Analysis o he in o ma ion in Figu e2 sugges s ha
in 2023, compa ed o 2013, he ollowing indica o s in-
c eased:
1)nominal GDP by 345%;
2)in la ion index by 4.6%;
3)a e age mon hly wages o wo ke s by 14.53%;
4)exchange a e by 364%.
Since he beginning o he mili a y con lic in he
Eas , eal GDP has inc eased by 4107.5 billion UAH, he
in la ion index has isen by 4.6%, he a e age exchange
Polinke ych
Economic Fo um, 2024, Vol. 14, No. 1
33
a e has g own o 28.69 UAH/USD, and he wage le el
has inc eased by USD 60.
Figu e3 shows he g ow h a es o in la ion, he a -
e age o icial exchange a e, he a e age mon hly sala y,
and eal GDP.
-50.00
0,00
50.00
100.00
150.00
200.00
250.00
300.00
2013 2014 2015 2018 2019 2020 2021 2022 2023
In la ion g ow h a e, %
G ow h a e o he a e age o icial
exchange a e, %
A e age mon hly sala y g ow h a e, %
Real GDP g ow h a e, %
Figu e 3. G ow h a es o in la ion, O icial exchange a e, Real GDP, and a e age mon hly sala y
in Uk aine om 2013 o 2023 since he onse o he a med con lic in Donbas, as a pe cen age o he p e ious yea
Sou ce: compiled by he au ho based on he da a O icial websi e o he Minis y o Finance o Uk aine (2021); O icial
websi e o he S a e S a is ics Se ice o Uk aine (2024)
A simila end was obse ed ollowing he onse o
he COVID-19 pandemic in 2023 compa ed o 2019:
1) he g ow h a e o eal GDP in 2020 was 3.88%,
inc eased o 14.28% in 2021, slowed down by 11.41% in
2022, and hen su ged by 42.74% in 2023;
2) he g ow h a e o he a e age exchange a e was
4.29% in 2020, 1.22% in 2021, 18.5% in 2022, and 13.08%
in 2023;
3) he a e age mon hly wage inc eased by 10.42% in
2020 compa ed o 2019, by 20.9% in 2021, by 6.03% in
2022, and by 17.4% in 2023;
4) he in la ion a e began o ise sha ply, wi h i s
g ow h a e a 0.86% in 2020 compa ed o 2019, 4.76%
in 2021, 15.09% in 2022, and hen slowed down by
16.98% in 2023.
Thus, i can be concluded ha p io o 2019, he e
was a g adual and consis en inc ease in eal GDP and
a e age mon hly wages, a slowdown in he in la ion a e,
bu a ise in he a e age exchange a e. The yea 2019
esul ed in a slowdown in he g ow h a e o eal GDP o
19.21%, in a e age mon hly wages o 18.41%, in he in la-
ion g ow h a e by 5.19%, and in he a e age exchange
a e by 4.96%. O e all, he s udy iden i ies h ee pe iods:
Pe iod 1 (2013-2014)– he build-up o con lic in Eas -
e n Uk aine. In 2014, Uk aine aced an economic c isis
ha deepened and necessi a ed he e o m o key s a e
ins i u ions. The wa in he Eas and p oblems in C imea
hinde ed hese e o m p ocesses. Add essing hese
challenges equi ed addi ional esou ces and enew-
al o he labou o ce. The con ibu ion o he Done sk
and Luhansk egions, as well as C imea, was signi ican .
These e i o ies accoun ed o 13.5% o Uk aine’s o al
a ea in 2013 and con ibu ed 18% o he coun y’s GDP.
Thei impo ance was u he unde sco ed by he ac
ha hey accoun ed o 25% o indus ial p oduc ion and
o med 25% o Uk aine’s expo s (I ano ,2015). Since
2014, he economic signi icance o C imea in Uk aine’s
GDP has no been epo ed by he S a e S a is ics Se -
ice o Uk aine (O icial websi e o he S a e S a is ics
Se ice o Uk aine, 2024). Done sk egion p oduced
5.4% o he coun y’s GDP in 2018, 5.15% in 2019, 4.89%
in 2020, and 5.19% in 2021. Luhansk egion con ibu -
ed 1% o he coun y’s GDP om 2018 o 2021 (O icial
websi e o he S a e S a is ics Se ice o Uk aine, 2024).
Pe iod 2 ( om 2019)– he pandemic pe iod began
wi h he onse o COVID-19, which dis up ed he ajec-
o y o de elopmen a bo h he mac o and mic o le els
and es ablished new ounda ions o changes in socie-
y’s way o li e. These changes a ec ed communica ion,
wo k, educa ion, and mo e. Qua an ine es ic ions in
mos coun ies, including Uk aine, led o an unp ece-
den ed ans o ma ion in he beha iou o economic
en i ies a bo h he consump ion and p oduc ion le els.
Cau ion became he dominan p inciple o mo i a ion
amid ongoing unce ain y.
Pe iod 3 ( om 2022)– he wa pe iod, which in ensi-
ied he nega i e ends caused by he co ona i us pan-
demic and he ongoing wa ac oss Uk aine. This pe iod
saw he apid des uc ion o in as uc u e, d i en by he
eloca ion o businesses om he Eas o he Wes . In e-
sponse, on Ma ch 17, 2022, he go e nmen de eloped
a business eloca ion p og am (O de No.246- …,2022).
This p og am aims o es o e he economy by p o iding
assis ance o businesses eloca ing om con lic zones
o sa e a eas in Wes e n Uk aine. Applica ions a e e-
iewed wi hin 1 o 5 days. The s a e o e s suppo in
selec ing eloca ion si es, anspo ing and housing em-
ployees, inding new s a , p o iding logis ical suppo ,
and iden i ying new ma ke s and supplie s. A he end o
Ma ch, he o al amoun o damage in lic ed on Uk aine
due o Russian agg ession exceeded USD 560 billion.
The majo i y o he losses we e sus ained by Uk ainian
in as uc u e, accoun ing o app oxima ely USD 120
billion, while he losses o businesses and o ganisa ions
The economic consequences o mili a y con lic s...
Economic Fo um, 2024, Vol. 14, No. 1
34
amoun ed o an addi ional USD 80 billion. Uk aine
launched a ze o-in e es loan p og am o businesses
du ing he wa , bu he loan esou ces we e limi ed o a
sum o UAH 60 million. Cu en ly, an inc ease in loan in-
e es a es o 5% is an icipa ed once he mili a y ac ions
cease. A simpli ied axa ion sys em was in oduced o
businesses wi h a u no e o up o UAH 10 billion, appli-
cable o he hi d g oup o indi idual en ep eneu s. The
only ax hey a e equi ed o pay is 2% o hei u no e .
Addi ionally, du ing ma ial law in Uk aine, business in-
spec ions by egula o y au ho i ies ha e been limi ed o
suspended. F om Ap il 1, 2022, businesses ecei ed UAH
6500 om he s a e budge o each employed in e nally
displaced pe son (Schwa z,2022). As o Ma ch 2, 2023,
800 businesses had been eloca ed. I is no ewo hy ha
683 o hese ha e esumed ope a ions in hei new lo-
ca ions. The mos popula egions o business eloca-
ion, whe e he highes concen a ions o eloca ed busi-
nesses a e ound, include Te nopil (6.3%), Khmelny skyi
(7.3%), I ano-F anki sk (8.3%), Che ni si (9.8%), Zaka -
pa ia (14.5%), and L i (24%) egions (Be ezhna, 2023).
As o Ap il 13, 2022, he Minis y o Economy had e-
cei ed 1500 applica ions o he eloca ion o businesses
om comba zones o sa e egions, wi h 300 businesses
al eady eloca ed, o which 121 we e ope a ional (Mel-
ny ska, 2022; Reloca ion p og am..., 2022). Acco ding
o Wo ld Bank o ecas s, Uk aine will spend mo e han
USD 600 billion on econs uc ion and eco e y (The
Wo ld Bank es ima ed he inancial loss o Uk aine om
he Russian in asion a USD 60 billion, 2022).
In 2023, he Uk ainian economy g ew by 5-5.5%, de-
spi e a signi ican decline o 28.8% in 2022. In 2021, he
economy expe ienced a 3% g ow h, whe eas in 2020,
he e was a con ac ion o 3.8% (Samoilyuk & Le chen-
ko, 2024). The economic eco e y in 2023 was suppo ed
by se e al ac o s:
▣ ising consume demand: his was d i en by an
inc ease in household pu chasing powe and he neces-
si y o spend sa ings on goods;
▣ business ac i i y: Uk ainian businesses adap ed
o he pandemic- ela ed es ic ions and amped up
p oduc ion;
▣ high ag icul u al yields in 2021.
The eco e y in 2021-2023 could ha e been mo e
as e , bu i was hinde ed by he apid inc ease in ene -
gy cos s due o sho ages, he high cos o aw ma e ials,
and he eme gence o new i us s ains ha caused he
pandemic. These challenges es ic ed p oduc ion and
dis up ed logis ics (Jus abou he economy (based on
he In la ion Repo o Janua y 2022, 2022). Acco ding
o he NBU, GDP g ow h a es we e expec ed o g adual-
ly accele a e o 4% (Fig.4).
4
3.7
3.4
3
2.9
3.1
3.3
3.5
3.7
3.9
4.1
2021 2022 2023 2024
GDP g ow h a e, %
linea (GDP g ow h a e, %)
Figu e 4. GDP g ow h a es in Uk aine in 2021-2024, %
Sou ce: de eloped by he au ho
F om Figu e 4, i can be concluded ha 2022 was ex-
pec ed o ma k he beginning o GDP g ow h, wi h o e-
cas s based on he linea model y=0.33x+2.7 and a high
R² coe icien o 0.99, indica ing a e y s ong co ela ion
be ween he independen and dependen a iab les.
I was also p edic ed ha in la ion would g adually
slow down o 7.7% in 2022 and u he o 5% in 2023.
In 2021, in la ion eached 10% due o ising global ood
p ices, which impac ed in e nal p ices as Uk aine bo h
expo s and impo s many ood p oduc s, coupled wi h
inc eased ene gy cos s. Ano he ac o con ibu ing
o high in la ion was he ise in income le els among
Uk ainians. As wages inc eased, so did p oduc ion cos s,
leading o highe p ices o goods and se ices. The
planned decele a ion o in la ion was a ibu ed o (Jus
abou he economy (based on he In la ion Repo o
Janua y 2022,2022):
1)a g adual decline in global commodi y p ices, es-
pecially o ene gy esou ces and ood, s a ing om
hei high le els;
2) las yea ’s high ag icul u al yields in Uk aine,
which we e expec ed o mi iga e he upwa d p essu e
on ood p ices;
3)The Na ional Bank o Uk aine’s plan o g adually
aise he key in e es a e o encou age ci izens o sa e
a he han spend. The e is a di ec ela ionship be ween
he NBU’s key in e es a e and bank a es, making sa -
ings in h y nia mo e a ac i e o he public.
The unemploymen a e in Uk aine was 9.8% in
2021, 9.1% in 2022, 18.2% in 2023, and 14.2% in 2024,
wi h plans o educe i o 10-12% in 2025-2026 (In la ion
epo o he NBU, 2024). Howe e , a dec ease in unem-
ploymen will only be possible i he pandemic subsides
and he economy eco e s.
Polinke ych
Economic Fo um, 2024, Vol. 14, No. 1
35
The wa in Uk aine has caused a su ge in he p ices
o oil, whea , and me als, eaching le els highe han
du ing he 2008 inancial c isis. This also applies o gas
p ices in Eu ope. Acco ding o IMF o ecas s, econom-
ic slowdown in Eu opean coun ies eached 3% by he
end o 2022 (compa ed o an a e age g ow h o 5.6-
6.7% in 2021) wi h an in la ion a e o 5.5%. The IMF
epo s ha Uk aine’s economy con ac ed by o e a
hi d– 35%– in 2022. By Ap il 1, in as uc u e dam-
age had amoun ed o USD 68 billion. The ag icul u al
sec o saw a decline in he expo o sun lowe oil and
co n, eaching only 5-10% o las yea ’s olumes (Zan-
uda,2022).
The analy ical no e “Uk aine’s wa ime economy:
An ope a ional assessmen , Ap il 2022” (Vyshlinskye
al.,2022) indica es ha he e will be changes in mac-
oeconomic indica o s such as GDP, budge , mig a ion,
ag icul u e, and indus y. The egions mos a ec ed by
he wa include Done sk, Zapo izhzhia, Kyi , Luhansk,
Mykolai , Sumy, Kha ki , Khe son, and Che nihi ,
which collec i ely accoun o 30% o he na ional GDP.
O e all, i is wo h no ing ha GDP in 2022 dec eased
by 10%. Howe e , when conside ing he occupied e -
i o ies, his igu e could each 35-40%. This can be
con as ed wi h a educ ion in ene gy consump ion by
app oxima ely 35%, hough a leas 70% o Uk aine’s
GDP is p oduced in sa e e i o ies.
As o Ap il 8, 2022, o al physical damages amoun -
ed o USD 80billion. The majo i y o hese losses we e
in he anspo a ion in as uc u e, accoun ing o USD
39billion, and housing, which su e ed USD 29billion in
damages. Uk aine’s budge de ici was UAH 166.8billion
in 2021, UAH 911.1 billion in 2022, and UAH 1.33 illion
in 2023 (Ilchenko,2024). This de ici is expec ed o in-
c ease in he u u e. App oxima ely 30% (UAH 32.5bil-
lion) o he e enue in he 2022 gene al budge came
om di idend paymen s by s a e-owned en e p ises,
no including UAH 19billion om he NBU. This sou ce
o e enue is no longe a ailable, and he e is a end o
sha ply declining e enue o he S a e Budge .
Acco ding o UN es ima es, as o Feb ua y 24, 2022,
4.2million Uk ainians had mig a ed (Fig.5). Be ween
Feb ua y 21 and 23, 2022, 113000 people eloca -
ed om he Done sk and Luhansk egions o Russia.
O e all, nea ly 6.48million people ha e been displaced
wi hin Uk aine due o he wa . This has led o a signi -
ican labo sho age in Uk aine, which will likely slow
down he pace o economic eco e y in he pos -wa
pe iod. In Uk aine’s ag icul u e sec o , a able ields and
a ms ha e been he ha des hi by he ongoing wa . Ap-
p oxima ely 13% o he land has been mined, making i
di icul o p epa e o sp ing plan ing. Due o he p o-
longed con lic in he Done sk, Zapo izhzhia, Luhansk,
Kha ki , and Khe son egions, he e has been a signi i-
can dec ease in p oduc ion: whea by 23%, co n by 3%,
ba ley by 21%, and sun lowe seeds by 20%. Uk aine is
a majo playe in he global ma ke , supplying 44% o
China’s whea lou impo s, 55% o i s co n, and 59% o
i s sun lowe oil (Vyshlinskye al.,2022).
Indus ial losses in 2022 amoun ed o USD 6.7 bil-
lion. A ound 100 indus ial en e p ises ha e been dam-
aged o des oyed. The me allu gy sec o los 30% o i s
asse s due o he des uc ion o majo plan s such as
“Azo s al”, “MMK Ilyich”, he A dii ka Coke Plan , “A ce-
lo Mi al K y yi Rih”, “Zapo izhs al”, and “Kame s al”,
which we e among Uk aine’s la ges me allu gical
plan s. Uk aine’s esiden ial complexes ha e been dam-
aged simila ly o educa ional ins i u ions and hospi als.
As o Ma ch 22, 2022, almos all egions ha e expe i-
enced des uc ion, wi h he excep ion o Volyn, L i ,
Zaka pa ia, I ano-F anki sk, Che ni si, Te nopil, and
Pol a a egions (Fig.6).
Figu e 5. Popula ion le Uk aine as o Ap il 3, 2022, male
Sou ce: summa ised by he au ho o Н. Vyshlinsky e
al.(2022)
Figu e 6. The numbe o des oyed objec s o ci il
in as uc u e in Uk aine as o Ma ch 22, 2022, uni s
Sou ce: c ea ed by he au ho based on H. Vyshlinsky e
al.(2022)
75%
80%
85%
90%
95%
100%
Damaged Comple ely
des oyed
4431 654
135 9
548 72
80
Residen ial
buildings
Medical
ins i u ions
Educa ional
ins i u ions
Ins i u ions o
cul u e and a s
15281
350632
2451342
301405
390302
643058
394740
Bela us
Russia
Poland
Slo akia
Hunga y
Romania
Moldo a
In 2020, esea ch conduc ed by he In e na ional
O ganiza ion o Mig a ion e ealed ha 40% o indi id-
uals displaced a e six yea s o wa , whe he eloca ed
o o he a eas o ab oad, did no conside e u ning o
Donbas (Almos 40% o displaced people do no plan o
e u n home a e he end o he wa – su ey,2020).
In Ap il 2022, 10% o Uk ainians who le he coun-
y h ough he Zaka pa ia egion had no in en ion o