Ukraine's economy fell 30.4% in 2022, largest annual drop in 30 years

Ukraine suffered its sharpest economic decline in over 30 years in 2022 because of the war with Russia, but said foreign aid and the “unbreakable spirit” of its people helped prevent an even worse scenario.

Preliminary economy ministry data on Thursday showed a 30.4 per cent drop in gross domestic product last year and economic analysts said risks and uncertainty remain high, especially if Russia continues to attack critical infrastructure in Ukraine.

Economy Minister Yulia Svyrydenko described the decline in GDP as the biggest in any year since Ukraine won independence from the Soviet Union in 1991, but said the fall was smaller than expected.

“In 2022, the Ukrainian economy suffered its largest losses and damages in the entire history of independence, inflicted on it by the Russian Federation,” Svyrydenko, who is also first deputy prime minister, said in a statement.

“The successes of Ukraine’s defence forces on the front lines, the coordinated work of the government and businesses, the unbreakable spirit of the population and the speed of rebuilding damaged critical infrastructure units, and also systemic financial support from international donors have allowed us to keep up the economic front and continue our movement towards victory.”

The war has caused widespread death and destruction, uprooted millions of Ukrainians, disrupted agriculture, limited access to the Black Sea ports that are vital for grain and metals exports, and driven up defence spending.

Ukraine’s economy is export-led, but exports have slumped since Russia’s February 24 invasion. The economy ministry said this week that exports had fallen 35 per cent compared with 2021, and physical volumes fell by 38.4 per cent this year.

Ukraine is a major global grain producer and exporter. Grain exports have fallen sharply since the invasion, with some seaports blocked by Russia, but again accounted for the bulk of the country’s exports in 2022.