The Russian offensive brought bombs and terror to Ukraine, but it also plunged the country into an economic abyss. Economic output collapsed by a third.
Before the war began, the occupied territories in the east of the country alone were responsible for 20 percent of the gross domestic product (GDP). These have now completely disappeared. The region is known for its steel and iron factories and power plants.
The economic damage could be even greater. However, the government managed to secure at least some of the economic output by moving hundreds of companies to the west of the country.
Great labor shortage
The Ukrainian economy is also suffering from labor shortages, particularly due to mobilization in the large agricultural sector, which still produces 106 tonnes of grains and oilseeds in 2021. According to the Grain Society, production fell to 67 tons in the first year of the war and is only expected to reach 50 tons by 2023. Farmers suffer from increased transportation and cultivation costs. The raw material and primary product supply of the difficult country pushed inflation to 26.6 percent last year.
As the economy collapses, tax revenues also fall. Ukraine needs a lot of money right now. The war swallows up huge amounts of money and leaves a deep hole in the household budget. The government expects a deficit of 20.6 percent of GDP for the current year, and half of the spending goes to national defense. For this, Ukraine is dependent on financial injections from abroad.
18 billion euro more financial aid
The EU has promised an additional 18 billion euros in financial aid to Ukraine. The US Congress added a $45 billion aid package to its budget. Since the beginning of the war, Ukraine has already received more than 140 billion euros, some in the form of low-interest loans. Switzerland has so far sent CHF 300 million in humanitarian aid to the warring country. The government uses the money to continue to finance salaries, pensions, hospitals and schools.
Ukrainian President Volodymyr Zelensky (45) wants to strengthen industry and agriculture with an investment of 430 billion dollars. However, potential financiers are currently reluctant to invest in the country. But after the war Ukraine will need much more money: The cost of reconstruction is estimated at 500 to 1,000 billion euros.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
