Economic and Political Overview

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In this page: Economic Outline | Political Outline | COVID-19 Country Response


Economic Outline

Economic Overview

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After years of political and economic tension, the Ukrainian economy had started to stabilise, but the outbreak of COVID-19 pushed it into recession in 2020 (-4%). According to the IMF, GDP growth rebounded to 3.5% in 2021, supported by the revival of external and domestic demand, as well as fiscal and monetary stimulus, and despite the new waves of Covid-19 infections. Economic growth was expected to accelerate marginally in 2022 (3.6%) before slowing down slightly in 2023 (3.4%) (IMF), but Russia’s invasion of Ukraine on February 24th 2022 darkened the outlook. The government called on Ukrainian citizens to resist but Russia’s determination suggests further escalation. Massive infrastructure destruction, disruption of agriculture, industry and trade, and large capital outflows will provoke a sharp contraction of economic growth in 2022 (The Economist Intelligence Unit).

Until February 2020, the Ukrainian economy was still in a robust macroeconomic state thanks to the successful implementation of a reform program, with declining public debt, falling inflation and positive growth forecasts, but the outbreak of the pandemic and the government reshuffle darkened the outlook (Euler Hermes). In June 2020, the IMF approved a USD 5 billion support package to help Ukraine to cope with COVID-19 pandemic challenges. Policies under the new arrangement focused on four priorities: mitigating the economic impact of the crisis; ensuring continued central bank independence and a flexible exchange rate; safeguarding financial stability while recovering the costs from bank resolutions; and moving forward with key governance and anti-corruption measures to preserve and deepen recent gains (IMF). The IMF approved an extension of the Stand-By Arrangement to end-June 2022. Following Russia’s attack, the IMF and the World Bank issued a join statement condemning the offensive and ensuring Ukraine for their support. The IMF responded to Ukraine’s request for emergency financing through a possible Rapid Financing Instrument; and the World Bank started to prepare a USD 3 billion package of support (including the mobilization of financing from several development partners) comprising fast-disbursing budget support operation and fast-disbursing support for health and education (IMF). Before the war, declining nominal GDP and Covid-19-related fiscal stimulus widened the fiscal deficit. After soaring to -5.2% GDP in 2020, public deficit decreased to -4% GDP in 2021 (IMF). It was expected to further decrease to -3.4% GDP in 2022 and -2.3% GDP in 2023 (IMF), but will deteriorate because of the conflict-related expenses and decreased revenues. Similarly, public debt, which reached 60.8% GDP in 2020, fell to 54.4% GDP in 2021 and was expected to continue decreasing to 51.7% GDP in 2022 and 48.9% GDP in 2023 (IMF). It is now forecast to widen. Inflation, which reached record lows in 2020 (2.7%), picked up again in 2021, reaching 9.5% (IMF). It was expected to decline gradually to 7.1% in 2022 and 5.8% in 2023 (IMF), thanks to better harvests, price corrections in global commodity markets, the hryvnia’s relative strength, the fading of low base effects, and the further impact of the NBU’s monetary policy tightening measures (National Bank of Ukraine). However, the war is causing food shortages and soaring inflation.
In addition to the continuation of the reform program agreed with the IMF, the priorities of the State Budget for 2022 remained unchanged: healthcare, education, security and defence, social sphere, infrastructure, business support and innovation (Ukraine Government Portal). Since Russia’s invasion, the government is focused on organising the resistance and gathering political and logistical support from the international community.
Ukraine's unemployment rate was falling until 2019, but due to the negative economic impact of the COVID-19 pandemic, it is estimated to have increased to 9.7% in 2021 and was forecast to stay high in 2022 (8.7%) and 2023 (8.2%) before the start of the war (IMF). The informal sector in Ukraine is estimated to account for a third of the country's GDP, and GDP per capita (at purchasing power parity) is only 20% of the EU average. The human cost of the war with Russia is still unknown but already, hundred of civilians have been killed, hundreds of thousands refugees have fled the country, and supply chains disruption have triggered food shortages.

Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 156.42e199.720.000.000.00
GDP (Constant Prices, Annual % Change) -3.8e3.4-
GDP per Capita (USD) 3e4000
General Government Balance (in % of GDP) -5.3-
General Government Gross Debt (in % of GDP) 60.647.
Inflation Rate (%) 2.79.420.60.00.0
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 5.17-
Current Account (in % of GDP) 3.3-

Source: IMF – World Economic Outlook Database, Latest available data

Note: (e) Estimated Data


Main Sectors of Industry

The agricultural sector plays a major role in Ukrainian economy. In 2020, it contributed to 9.3% of the GDP and employed 14% of the working population (World Bank). The main crops are cereals, sugar, meat and milk. Ukraine is the world's fifth largest exporter of grain. The European Union has reduced its customs duties on the agricultural areas of Ukraine, which could be a boon for this sector. The country is rich in mineral resources, mainly iron and magnesium, as well as in energy resources (coal and gas).
The secondary sector employs a quarter of the active population and accounts for 20.8% of the GDP, a percentage which has declined considerably in recent years. The Ukrainian manufacturing sector is dominated by heavy industries such as iron (Ukraine is the world's seventh largest producer of iron) and steel. These two sectors alone account for around 30% of the industrial production. However, steel production is now below its pre-2008 level. Coal mining, chemicals, mechanical products (aircraft, turbines, locomotives and tractors) and shipbuilding are also important sectors.
The service sector employs 61% of the workforce and contributes to 55.7% of the GDP. Ukraine is a country of energy transit, historically transporting Russian and Caspian oil and gas to Western Europe and the Balkans, through its territory. However, in the context of tensions with Russia, Ukraine’s role as the main transit corridor has diminished, with Russia seeking alternative routes (to the south via Turkey and to the north via Germany). The transit contract between Gazprom and Naftogaz Ukrainy, which expired on December 31, 2019, has been extended for a period of five years.

Due to the COVID-19 pandemic, Ukrainian economic sectors have been hit hard in 2020, but a recovery occurred in 2021. Agriculture was among the least affected by quarantine restrictions, while service, trade and transport have been the most affected. Approximately 700,000 small businesses in the service sector have closed (UNIDO).

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 13.8 25.0 61.2
Value Added (in % of GDP) 9.3 20.9 55.6
Value Added (Annual % Change) -11.5 -3.3 -2.4

Source: World Bank, Latest available data.


Find more information about your business sector on our service Market Reports.

Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist - Business Environment Rankings 2014-2018


Country Risk

See the country risk analysis provided by Coface.


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Political Outline

Current Political Leaders
President: Volodymyr Zelensky (since 20 May 2019)
Prime Minister: Denys Shmyhal (since 4 March 2020)
Next Election Dates
Presidential: March 2024
Supreme Council: July 2024
Current Political Context
On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

Since he was elected President in April 2019, former actor and television producer Volodymyr Zelensky promised to prioritise two issues highlighted during his campaign, corruption and the conflict in eastern Ukraine (Donbass). The absolute majority obtained at the legislative elections of July 2019 allowed him to launch a reform program but with many challenged, as illustrated by the political crisis that emerged in October 2020. A controversial ruling by the Ukrainian Constitutional Court cancelled key anti-corruption legislation, notably the requirement for government officials to file e-declarations of their assets. This led Ukraine's main donors, including the IMF, to suspend their funding. In its fight against corruption, President Zelensky suspended the country’s chief justice and removed judges from their offices, exceeding his powers and violating the Constitution. Voices expressed their concerns over the changing nature of his regime.

Regarding the Donbass issue, the situation escalated considerably since the Russian and Ukrainian presidents met in Paris in December 2019 under the mediation of French and German leaders, Mr. Macron and Ms. Merckel. A tripartite meeting between Ukraine, Russia and the EU took place in Minsk in December 2019, leading to the renewal for five years of the contract binding Gazprom and Naftogaz governing the transit of gas from Russia to the EU by Ukraine. However, Russia completed in mid-2021 the construction of its Nord Stream 2 pipeline project linking Russia and Germany and doubling the capacities of Nord Stream 1, which would cause revenue losses for Ukraine of around 3 billion USD per year. Germany warned that the pipeline would not be allowed to come into service in the event of a new escalation in Ukraine, and following Russia’s large scale military invasion of the country launched at the end of February 2022, Nord Stream 2 certification was withhold. Ukraine's government declared martial law, mobilised its armed forces and called on citizens to resist (The Economist Intelligence Unit). Western countries adopted an unprecedented range of sanctions against Russia and provided training and weapons to Ukraine. At the 25 February UN Security Council vote condemning the invasion of Ukraine, China opted for abstention, demonstrating its ‘no limits friendship’ with Russia.

Main Political Parties
Among the main parties represented in parliament stand:
- Servant of the people: founded in 2016 under the name of Party of decisive change, then renamed according to the comic television series whose main character is Volodymyr Zelensky
- Opposition platform - For life: pro-Russian, center
- Union Panukrainienne “Patrie”: center right
- Voice: founded in 2019 by singer Sviatoslav Vakartchouk, center-right
- Oleh Liachko Radical Party: right
- Strength and Honor: center right
Type of State
Ukraine is a parliamentary democracy.
Executive Power
The President is the head of state and is elected by universal suffrage for five years. He is the commander-in-chief of the army and it is he who appoints the Prime Minister - the head of government - once he has been appointed by Parliament, as leader of the party or of the majority coalition. The Prime Minister's term is five years. Executive power is shared between the President and the Prime Minister. The President chooses the Minister of Defense and the Ministry of Foreign Affairs, the other ministers of the Council are chosen by the Prime Minister.
Legislative Power
The legislature in Ukraine is unicameral. The parliament called Supreme Council consists of 450 seats with its members chosen on a proportional basis from those parties that gain 3% or more of the national electoral vote; members serve five-year terms. The President has the power to dissolve the Supreme Council, if he so wishes. The people of Ukraine have limited political rights.

Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Partly Free
Political Freedom:
Civil Liberties:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


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COVID-19 Country Response

COVID-19 epidemic evolution

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Ukraine and the current sanitary measures in vigour, please consult the website of the Ministry of Health and that of the national Center for Public Health (both in Ukrainian).

Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Ukraine on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the information on the economic recovery scheme put in place by the Ukrainian government to address the impact of the COVID-19 pandemic on the national economy, please visit the economic news section of the official governmental portal. For a summary of the economic and fiscal measures in vigour, consult the dedicated page from KPMG.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Ukrainian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Ukraine in the
IMF’s Policy Tracker platform.

Support plan for businesses
For the information on the local business support schemes established by the Ukrainian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the website of the national Export Promotion Office (EPO, in Ukrainian). Further information is available on the official portal of the Ukrainian government and on KPMG's website.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters
The Ministry of Economic Development, Trade and Agriculture of Ukraine, in partnership with the Export Promotion Office, created an online platform to inform exporting entrepreneurs about updates related to preventive measures to counteract the spread of Covid-19, including assessment of business risk, links to services for entrepreneurs, and government support tools.

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Latest Update: November 2022