Ukraine’s economy continues to function, but risks remain high
Four years and eight months after the start of the large-scale Russian invasion, Ukraine’s political and economic future remains highly uncertain. Cities, energy supplies and logistics infrastructure across the country are under constant attack from the air. The humanitarian and financial damage caused by the war is immense. Millions of Ukrainians are still living abroad. According to the World Bank, the estimated cost of reconstruction amounts to nearly USD 600 billion.
Growing interest among exporters
The greatest need for investment in Ukraine lies in the energy sector, where, according to estimates, around 70 per cent of generation capacity has been destroyed by the war. There is a major challenge ahead in modernising the sector and making it more sustainable, through decentralisation and integration with the European electricity grid. Other promising sectors for Dutch exporters include circular construction, agriculture and food, healthcare and the water sector.[1] Atradius Dutch State Business has observed in practice that there is growing interest in Ukraine amongst Dutch exporters. It is also one of the participants at the Rebuild Ukraine conference in Poland, which is being held on 12 and 13 November. See previous article.
Political situation: war dominates
As Ukraine remains under a state of emergency, both the presidential and parliamentary elections have been postponed indefinitely. Although the Zelensky government’s policies continue to enjoy broad public support, corruption scandals and concerns about the concentration of power have weakened its position. In 2025, the first anti-government protests since the start of the large-scale war took place, in response to political interference in anti-corruption bodies. This resulted in the largely reversal of the controversial restrictions.
[1] RVO (2026), Key sectors for the reconstruction of Ukraine, 2 September 2026, https://www.rvo.nl/onderwerpen/landen-en-gebieden/oekraine/sectoren
Peace negotiations with Russia have stalled for the time being. Russia’s demands regarding the ceding of territory, a significant reduction in the armed forces and renouncing NATO membership are unacceptable to Ukraine and its European partners. European countries and other international partners are now providing the bulk of military, financial and humanitarian support to Ukraine. The United States remains involved in diplomatic talks and supplies intelligence and weapons. At the same time, the US government’s stance towards Ukraine is erratic and often runs counter to Ukrainian interests, as demonstrated by the recent diesel deal between the US and Russia. Furthermore, since the Trump administration took office, US financial aid to Ukraine has fallen dramatically.
Economic resilience under severe pressure
The war with Russia has hit Ukraine’s economy hard. The size of the economy contracted by almost a third in 2022, as a result of the loss of territory, the destruction of buildings and infrastructure, and the displacement of part of the population. In the years that followed, the economy began to grow again, but growth slowed in 2025 due to intensive Russian attacks. The economy is not expected to return to its pre-war size until 2030, although this depends heavily on the course of the war.
Inflation poses an additional challenge. High government spending, rising labour costs and a depreciation of the currency are keeping price pressures high. The central bank is therefore pursuing a tight monetary policy. This helps to stabilise the currency and inflation, but makes credit more expensive for businesses. On a positive note, thanks to international support, Ukraine has relatively ample foreign exchange reserves. The central bank has also eased capital and foreign exchange controls in recent years. As a result, new transactions covered by export credit insurance are often easily executable. The remaining capital and foreign exchange controls mainly affect older contracts dating from before the large-scale invasion.
Attacks on ports are hampering the export engine
The vulnerability of the logistics chain is most evident around the Black Sea. In 2025, agricultural products accounted for 56 per cent of Ukraine’s goods exports. Around 90 per cent of maritime agricultural exports pass through the ports of Chornomorsk, Odessa and Pivdennyi. Russia has repeatedly attacked grain terminals, port facilities and civilian shipping in this region with drones and missiles. As a result, estimates suggest that only a third of the potential grain export capacity via the Black Sea remains available.
Ukraine has partially shifted its grain exports to alternative routes via road and rail links and the Danube ports, but these cannot fully replace the seaports. Even at maximum capacity, they are estimated to provide only half the capacity of the maritime route. The consequences are significant: in September 2026, grain exports were 37 per cent lower than a year earlier. In the event of a prolonged closure of the Black Sea route, a large volume of agricultural products cannot be exported via the existing routes.
Banks are resilient, but often closely intertwined with the state
Public finances are under severe pressure due to the war. A budget deficit of approximately 18 per cent of GDP is forecast for 2026. Ukraine cannot finance deficits of this magnitude independently on the international capital market and remains dependent on concessional loans and support from the European Union, the IMF and other partners. Public debt stands at around 110 per cent of GDP and, according to the IMF, is unsustainable without further restructuring. In addition, Ukraine has a high need for external financing due to its large current account deficit and debt repayments.
Financing innovation before exports take off
The main vulnerability is the strong interdependence with the government. State-owned banks account for more than half of banking assets, and government securities make up around a quarter of their total assets. In addition, banks extend a great deal of credit to state-owned enterprises. Problems with the sustainability of public debt could therefore spill over into the financial sector. Exporters would be well advised to channel payments, guarantees and financing through financially sound banks and, when dealing with public-sector buyers, to investigate whether a guarantee from the central government is possible.
Opportunities for Dutch exporters
Despite the high risks, interest in Ukraine is growing. The need for recovery and reconstruction is enormous and spans sectors in which Dutch companies excel: water, agriculture and food technology, energy and healthcare. Furthermore, the country wishes to integrate further into the European single market. In the long term, this could lead to better regulation, more transparent tendering processes and closer trade relations.
Atradius Dutch State Business offers extended export credit insurance for Ukraine on behalf of the Dutch government. The facility provides coverage for transactions that are difficult to insure under standard export credit insurance. Further information can be found on the website.
Theo Smid – Senior Economist