Not only a shortage of personnel and loans: the government explained what is holding back the economy
16 April 16:27
In February 2025, Ukraine’s GDP grew by 0.7%, and by 1.1% in the first two months of the year. The somewhat lower figure at the beginning of the year reflects the uneven growth trends of the past year, as GDP growth for 2024 is estimated by the State Statistics Service at 2.9%, which is slightly lower than the previous estimate of the Ministry of Economy. These figures and explanations are contained in the February Monitoring of Major Events in the Ukrainian Economy, prepared by the economic agency, "Komersant Ukrainian" reports.
The review also draws attention to the fact that GDP growth in the first two months of the year is slightly higher than the forecast for the first quarter. The key factors behind this growth are:
– restoration of damaged critical infrastructure, major reconstruction and repair;
– housing construction (eRestoration and eHouse programs);
– procurement of domestic defense industry products;
– implementation of business recovery and development programs funded by international financial assistance and contributing to the recovery and growth of manufacturing production in general;
– improvement of consumer sentiment for the fourth month in a row (according to Info Sapiens), despite some acceleration of inflationary processes;
– the domestic economy generating growing revenues to the state budget.
The biggest problems that continue to negatively affect economic expectations and sentiment are: a high level of danger due to missile and unmanned aerial vehicle attacks, uncertainty about the further course of hostilities; as well as a significant shortage of qualified personnel and a shortage of available credit resources.
What about inflation and prices
In February 2025, consumer inflation accelerated to 13.4% year-on-year, while the monthly rate slowed to 0.8% (from 1.2% a month earlier)
At the beginning of the year, the food market was characterized by the continuation of previous trends: food prices continued to grow at a higher rate than prices in the consumer market as a whole (by 15% for food in February, compared to 13.4% overall in annual terms).
The main factors that accelerated inflation in this group of goods were
– a limited supply of certain agricultural products, which directly affected prices for food products that are raw or have a low degree of processing: the largest price increases (year-on-year) were recorded for cabbage and carrots
– pressure from global prices, which had the most significant impact on processed foods: chocolate, butter and sunflower oil saw the highest year-on-year price increases;
– high business costs, which was reflected mainly in the prices of food products with a high degree of industrial processing.
What were the trends in the labor market?
Despite the limited economic activity of enterprises under martial law, in January-February 2025, there was a decrease in the number of registered unemployed compared to the same period last year. This happened in the context of ongoing migration processes and mobilization into the Armed Forces of Ukraine, as these categories of people ceased to be registered as unemployed.
At the same time, in December 2024, there was a decrease in the number of insured persons (employees), which was 67 thousand people less than in December 2023, which is also due to the mobilization of employees and the continuation of migration processes.
Some stabilization of migration processes is recorded in Ukraine
According to the UN Refugee Agency, as of March 20, 2025, 6.933 million refugees from Ukraine were registered worldwide: 6.373 million refugees in Europe, 0.56 million refugees outside of Europe.
That is, there was a slight outflow from Ukraine compared to as of December 31, 2023, namely, about 0.5 million people.
Based on a survey conducted by the UN Refugee Agency in selected European countries between October 2024 and February 2025, the following information about migrants was also obtained
– among people aged 18-59 years – 36% women, 17% men;
– the largest number left in the first and second quarters of 2022 (29% and 13% respectively);
– before leaving Ukraine, 52% of Ukrainians were employed, 42% were employed in the host country;
– before leaving Ukraine, 5% were unemployed, while 15% were unemployed in the host country.
Consumer sentiment among Ukrainians is on the rise
According to Info Sapiens Consumer Confidence in Ukraine, the Consumer Confidence Index of Ukrainians in March of this year increased by 8 points compared to February and reached 84.3 points.
“In March 2025, the population of Ukraine assessed their current situation more positively,” Info Sapiens analysts stated, drawing attention to the fact that in March the highest value of the Consumer Confidence Index was recorded for the last 2 years of observations.
Businesses also demonstrate a positive attitude
In March, the Index of Business Expectations crossed the neutral mark for the first time in 11 months and rose to 51.8, while in February it was 46.9. This conclusion is contained in the March survey of the National Bank of Enterprises of Ukraine.
The improvement in expectations in all sectors was driven by robust consumer demand, increased production, international financial assistance, stabilized energy supply, and seasonal factors. Employment estimates also improved slightly.
At the same time, the intensification of shelling of critical facilities, exchange rate and inflation expectations, and a shortage of skilled workers remained constraining factors.
