Economic Divide: NBU Warns of Risk of “Depressed Regions” Emerging Due to the War
10 May 11:14
Economic activity in Ukraine is increasingly shifting toward relatively safe regions, which is exacerbating regional disparities and creating risks of the formation of depressed economic clusters. This was reported by Delo.ua, citing the National Bank of Ukraine’s inflation report, according to "Komersant Ukrainian".
The NBU notes that the war is creating long-term structural asymmetry, which limits the potential for economic growth. The most vulnerable regions remain those near the front lines and along the border, where infrastructure destruction is compounded by the depletion of the economic base and population outflow.
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The regulator emphasizes that economic activity in the affected regions is largely sustained by defense spending and emergency infrastructure repairs. At the same time, these territories are entering a reconstruction phase with the worst starting conditions due to massive losses.
The report categorizes regions by risk level and extent of destruction. The heaviest burden falls on frontline regions, including Donetsk, Kharkiv, Zaporizhzhia, Kherson, and Dnipropetrovsk. Border and quasi-border regions, which face regular attacks and have limited economic resilience, are highlighted separately.
According to the NBU, the best economic performance is observed in the western hinterland regions, which have become hubs for the relocation of businesses, labor, and investment. This sharpens the contrast between regions and shapes divergent recovery trajectories.
The NBU also notes a widening gap in the agricultural sector: in frontline regions, the gross harvest of grains and oilseeds has significantly decreased, while in the rear regions, some indicators have even increased.
In conclusion, the regulator emphasizes that without a systematic state policy on recovery and investment stimulation, regional imbalances may become entrenched for the long term.
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