Detachable Subdivision
"Rivne Professional College of
National University of Life
and Environmental Sciences of Ukraine"
December 2024 was another challenging month for the Ukrainian economy, which continues to function amid war, economic instability, and efforts to restore critical infrastructure. Despite significant challenges, the Ukrainian government and international partners are taking steps to stabilize macroeconomic indicators and ensure the basic needs of the population.
Macroeconomic indicators
According to estimates by the Ministry of Economy, the GDP decline in 2024 is about 5.6%. The main reasons are the destruction of infrastructure, reduced investment activity, and reduced production capacity in war zones.
Inflation in December reached 12.4% on an annual basis. The main drivers of price increases remain energy, fuel and food products. Electricity prices increased by 18% due to damage to energy infrastructure.
Ukraine's total public debt is $125 billion, of which 45% is external liabilities. Loans from the IMF and the EU cover the budget deficit, but at the same time increase the debt burden.
The Ukrainian labor market in 2024 faces a paradoxical situation: high unemployment (about 171% of the total) is combined with a shortage of labor in certain sectors and regions. The reasons for this situation are the significant migration of the working-age population abroad, the destruction of infrastructure and enterprises in war-torn regions, as well as the mismatch of workers' qualifications with the needs of the modern market. The problem is especially acute in the renewable energy, logistics, and construction sectors, where economic activity is slowing down due to a shortage of personnel.
International aid
Ukraine received significant financial support from Western partners in December:
– The IMF provided another tranche of $1.5 billion to support the budget and finance social programs;
– The EU has allocated €500 million for the modernization of energy infrastructure, as well as financing the renovation of residential facilities;
– The United States continues to provide military and humanitarian assistance. In particular, $1.4 trillion was allocated to supply air defense systems and finance programs to support internally displaced persons.
Energy sector
December was marked by problems in the energy sector. Prolonged shelling led to temporary power outages in many regions. Despite this, the government was able to provide critical facilities with power supply. Measures are planned to reduce dependence on traditional energy sources, including the launch of new projects in the field of renewable energy. In August 2024, the government approved an investment plan worth 20 billion US dollars, aimed at increasing the share of renewable energy sources in the country's energy balance to 27% by 2030.
Prospects for 2025
Economic analysts predict a moderate recovery in 2025, provided the intensity of hostilities decreases and international support continues. The priorities remain:
– Reforming the tax system to stimulate small and medium-sized businesses. A strategy for the recovery, sustainable development and digital transformation of SMEs has been developed for the period until 2027, which provides for a number of measures to support entrepreneurship;
– Restoration of transport and energy infrastructure. The Government of Ukraine continues to implement large-scale plans to restore transport and energy infrastructure in 2025. In particular, it is planned to allocate UAH 9.5 billion for the repair and maintenance of roads, of which UAH 3.3 billion will be directed to frontline territories.
Conclusion
December 2024 confirmed that Ukraine's economy remains under significant pressure from war and global challenges. However, through international assistance and reforms, the government is striving to create the conditions for recovery and long-term development. The coming year will be crucial for stabilizing the economy and laying the foundations for future recovery.
Sources:
– Official website of the Ministry of Economy of Ukraine;
– IMF publications;
– World Bank Analytics.
Alla HNATYUK,
Candidate of Economic Sciences, Associate Professor, Teacher – Methodist
