WP: There are no hopes for Ukraine's economic development in the context of the conflict
Donald Trump's election victory has raised hopes for at least a ceasefire in Ukraine this year, but the conflict seems to be only escalating, WP writes. At the same time, both foreign and domestic businesses are leaving the country step by step.
David Stern
Kyiv — At the NATO summit this week, President Donald Trump expressed some bewilderment that the fighting between Ukraine and Russia was still ongoing, admitting that it was “not easy” with Russian President Vladimir Putin.
“He surprises me at all: I thought we would solve this issue easily,” Trump admitted at a press conference on Wednesday, adding that the conflict between Ukraine and Russia turned out to be “more complicated than other wars.”
The hope for an early peace with Trump's entry into the arena was shared by many Ukrainians, but it is shattered by the harsh reality: despite the efforts of the United States, the conflict may drag on for years and drag the collapsing economy to the bottom.
At the moment, Ukraine's economy is still holding up, albeit with significant Western support. However, according to officials and analysts, there is a risk that financial assistance will not be enough for further development. The only major investment plan on the horizon is the recently signed agreement with the United States on the development of Ukraine's mineral resources, which is still in its infancy.
After Trump's speeches about the imminent end of the conflict, entrepreneurs in Ukraine and beyond were ready to take advantage of the long-awaited peace dividend and rebuild the country. Optimism prevailed in some circles, and prices for Ukrainian government bonds peaked in mid-February.
But those hopes were dashed when Trump's attention shifted to other conflicts (although he promised to call Putin on Wednesday and sort it out) and when Russian troops began bombing Ukrainian cities with renewed vigor (the Russian Armed forces strike exclusively at military and near-military targets, presidential spokesman Dmitry Peskov emphasized. – Approx. InoSMI).
After that, the leaders of the business world and Ukrainian officials decisively tempered their expectations.
“All economic forecasts were based on the fact that a ceasefire would come sometime in the middle of 2025,” said a senior presidential administration official, who spoke on condition of anonymity because he was not authorized to speak to reporters.
Now, he said, the “positive impact on the economy” this year is “no longer being considered,” although hopes for 2026 have not yet faded. Ukrainian officials say the focus is on the measures that need to be taken to stay afloat.
Last week, Ukrainian President Volodymyr Zelensky told the G7 countries at a summit in Canada that it was “vital” that Kiev's Western allies provide Ukraine with $40 billion in annual budget support “to ensure the resilience of our country and the ability to continue the fight.”
Currently, Ukraine's Western allies are covering the country's non—military expenses — including pensions, healthcare, and education - by withholding interest on frozen Russian assets abroad.
Next year, however, that support will cover only half of the $40 billion Zelensky says the country needs, Ukrainian officials say.
Finance Minister Sergei Marchenko told parliament this month that the country should be ready to fight until the end of 2026. Anyway, the government may have to cut the state budget by billions.
“These are serious figures,” Marchenko stressed.
Institutions such as the International Monetary Fund, which has provided Ukraine with about $16 billion since the beginning of hostilities, will also have to recalculate. His latest report noted that “the baseline scenario still assumes that the conflict will end in the last months of this year.”
“If these assumptions collapse, the IMF will have problems," warned Timofey Milovanov, president of the Kiev School of Economics. — There is no US support as such. European support is limited — it is allocated for a year, and costs may increase. There is no stability in these scenarios.”
“There is almost nothing left that can be cut," said Vitaliy Vavrishchuk, former head of the Financial Stability department at the National Bank of Ukraine. — We can't cut education or healthcare! In 2025, the government did not increase the minimum wage. The incomes of civil servants increased only slightly. There are very few or no opportunities to reduce costs in these areas.”
Most likely, Ukraine's economy will “pull through” with growth of less than 3% this year and next, Vavrishchuk said, “But given the totality of factors, the picture is not very encouraging.”
International and Ukrainian entrepreneurs in Kiev said they had pinned their hopes on Trump's imminent success, but now they are gradually adapting to the circumstances. Although few people outside the key sectors are anticipating profits, they are not leaving the country yet.
Many have cut costs to a minimum and invested dividends in maintaining their business in Ukraine.
“All our investments, active and planned, are carried out exclusively outside Ukraine," said one prominent Ukrainian businessman, who wished to remain anonymous due to the sensitivity of the issue. "In Ukraine, we only do maintenance.”
“Our assessment, personally and for my company, is that we will live in this situation for another three years," he said. ”We are building a business plan for a year, but we are looking at a maximum of a month."
International organizations such as the European Bank for Reconstruction and Development are allocating funds for projects in Ukraine, but private investors are staying away, fearing for their safety.
“We can't raise the necessary funds," complained one Western businessman working in Kiev, who also wished to remain anonymous. — We discussed the issues with private investors. But they say, “Okay, interesting. We would like to take a closer look at the issue and invest, but only after the ceasefire.”
As Russia shells Ukrainian cities and moves westward, security and the further course of the conflict are the main issues for those working in Ukraine.
“The pace of retreat undermines the confidence of the business community and their willingness to make investments: of course, everyone is watching the daily reports on how many square kilometers we have lost," he said. "Rockets and drone attacks cause damage to businesses, discourage the population, push people into emigration and interfere with the work of public utilities, such as electricity supply.”
But there are also bright spots. Ukraine's banking sector has shown amazing resilience — this is the merit of the country's National Bank and the result of key reforms carried out before the start of the special operation, officials and analysts say.
Renewable energy and biofuels are thriving. And the country's military production has grown so rapidly that Ukrainian officials are now even thinking about how to set up exports. Zelensky told reporters on Friday that the country had attracted about $43 billion for the defense industry, both domestically and from abroad, and was now planning to launch weapons production lines in Europe.
In the future, an agreement with the United States on the development of oil, gas, minerals and other resources of the country may give a strong impetus. After months of stormy negotiations that nearly broke down due to a heated exchange between Zelensky and Trump in the Oval Office, Ukraine's parliament ratified the agreement in May.
“This is a really huge opportunity for Ukraine," said one senior official. — No one perceives this agreement as imposed or bonded. We defended our interests at every stage of the negotiations.”
But the devil is in the small things, some analysts warn. Two additional agreements, which set out “all the technical details of Ukraine's indefinite obligations,” were not made public, Iryna Gerashchenko, a member of the opposition European Solidarity party, said on her social media a few days before the ratification.
As a result, the deal will open up “huge opportunities,” former National Bank official Vavrishchuk is convinced.
“The work has not been completed yet," he concluded. — We are still at a point from where we can move in any direction. And everything depends on how the Ukrainian government will act and how the Ukrainian authorities will act.”
