As the Russian army continues to wage a brutal war of attrition in Ukraine, the two nations are also locked in an economic contest that could play a key role in determining the outcome of Europe’s largest invasion since World War II.
A little noticed fact is that the Ukrainian economy is actually doing relatively well in the context of the current war. The Russian onslaught in 2022 reduced Ukraine’s GDP by 29 percent, but in 2023 it recovered by an impressive 5.5 percent. Last year, Ukrainian GDP rose by a further 3 percent, though growth is likely to slow to 1.5 percent this year.
Any visitor to Ukraine can take out cash from an ATM or pay in shops using an international credit card. Countries embroiled in major wars typically experience price controls, shortages of goods, and rationing, but Ukraine has none of these. Instead, stores are fully stocked and restaurants are crowded. Everything works as usual.
How has this been possible? The main answer is that Ukraine’s state institutions are far stronger than anybody anticipated. This is particularly true of the ministry of finance, the National Bank of Ukraine, and the state fiscal service. After 2022, Ukraine’s state revenues have risen sharply.
Voice of Ukraine 