Since the start of the war with Russia in February 2022, Ukraine's economy has faced significant challenges and changes. The conflict has resulted in the loss of thousands of lives and the displacement of millions of Ukrainian citizens. It has also caused destruction to key export hubs, disrupted trade routes, and impacted financial markets.
Data from Ukraine's central bank, as cited by The Brookings Institution, shows that the country's trade deficit has been expanding since the war began. In February 2022, Ukraine imported $5.9 billion worth of goods and exported $4.9 billion, resulting in a trade gap. This gap has since doubled as of May 2023.
The recent bombing of the port of Odesa by Russia and their decision to withdraw their agreement allowing safe passage of Ukrainian exports in the Black Sea have further exacerbated the situation. These events have led to a sharp increase in wheat prices, which could worsen the trade deficit.
In addition to the trade struggles, Ukraine's government spending has outpaced revenue, creating financial difficulties for the country. The reliance on support from other countries, such as the US and Europe, has increased significantly. The US has been a major contributor, providing both military and financial aid to Ukraine during the war.
The Ukrainian central bank has also played a role in the country's economic challenges. By printing more money, the central bank has contributed to inflation. However, inflation has been gradually easing, and there are indications that the government may consider loosening monetary policy.
The future of Ukraine's economy depends on various factors, including the course of the war, international support, and the actions of the central bank. The situation in Russia is also relevant, as the country has faced its own economic difficulties due to sanctions and other factors.
Overall, the war with Russia has had a significant impact on Ukraine's economy, causing trade struggles, increased government spending, and inflation. The support of other countries and the actions of the central bank will play a crucial role in determining the future path of Ukraine's economy.