Ukraine recovers from record GDP contraction in 2022
Ukraine’s economy is proving to be resilient despite the ongoing war with Russia. The government announced this past week that the gross domestic product (GDP) had grown 19.5% year-on-year in the second quarter of 2023. That’s a remarkable recovery after a record-high contraction of 37.2% year-on-year was recorded in the second quarter of last year. In total, Ukraine’s GDP declined by a staggering 29.6% in 2022.
The boost is mainly due to an increase in domestic demand as people and businesses grow more used to the war, as well as the government’s response, international trade, and foreign assistance, the Economy Ministry said in a statement. In short, Ukraine’s economy and people are adapting to wartime conditions despite Russia’s continued aggression and last year’s collapse.
“People are getting used to it,” Olena Bilan, chief economist at Kyiv-based investment bank Dragon Capital told Bloomberg regarding the sharp quarter two GDP growth.
Ukraine faces fresh attacks on its energy system
However, Ukraine’s economic recovery may be threatened by renewed Russian attacks on its energy system. Following the first mass attack on Ukraine’s energy system in six months on Sept. 21, the question on everyone’s mind is if Russia is planning a new missile and drone strike campaign aimed at crippling Ukraine’s energy network. Those attacks made the last winter season extremely difficult in the country, leading to frequent blackouts and a lack of heating across the country.
At one point after Russia launched around 100 missiles primarily at the energy infrastructure on Nov. 15, 2022, almost half of Ukraine’s energy system was down. President Volodymyr Zelensky has said that Russia is likely to deploy this strategy again this winter.
The morning wave of Russian attacks on Sept. 21 damaged energy facilities in western and central Ukraine and caused partial blackouts in Rivne, Zhytomyr, Kyiv, Dnipropetrovsk, and Kharkiv oblasts, according to Ukraine’s state energy operator Ukrenergo. Throughout the attack, Ukraine’s Air Force reported that 36 out of the 43 missiles Russia launched were shot down, killing two and injuring dozens.
Ukraine prepares for winter challenges
Ukrainian officials have stated that the country’s energy infrastructure has been largely repaired and is ready to meet the challenges of the upcoming winter. However, with a continued lack of air defenses in the country, one can imagine that no matter how well-prepared Ukraine is, it may be under-protected.
In an upcoming story for the Kyiv Independent, our reporter Alexander Query will give our readers a detailed account of how ready Ukraine really is and what the country can do to ensure its energy system is once and for all resilient against outside threats.
Ukraine has also been seeking alternative sources of energy to reduce its dependence on Russian gas and electricity. The country has been developing its renewable energy sector, especially solar and wind power, as well as exploring nuclear fusion technology with South Korea.
Ukraine attracts foreign investors and entrepreneurs
Despite the war and the energy crisis, Ukraine has not lost its appeal for foreign investors and entrepreneurs. During a visit to the United States last week, President Volodymyr Zelensky met with leading American businessmen and financiers in New York to discuss investment opportunities in Ukraine.
Among them were Elon Musk, founder of Tesla and SpaceX; Mark Zuckerberg, founder of Facebook; Jeff Bezos, founder of Amazon; Tim Cook, CEO of Apple; Warren Buffett, CEO of Berkshire Hathaway; and George Soros, founder of Open Society Foundations.
Zelensky said that he invited them to invest in Ukraine’s innovation sector, especially in IT, biotechnology, aerospace, green energy, and cybersecurity. He also said that he offered them favorable tax conditions, legal protection, and visa-free regime.
Some of the American entrepreneurs expressed their interest in cooperating with Ukraine. Musk said that he was impressed by Ukraine’s achievements in space exploration and rocket engineering. He also said that he would consider launching some of his satellites from Ukraine’s spaceport in Dnipro.
Zuckerberg said that he was interested in supporting Ukrainian startups and social media platforms. He also said that he would visit Kyiv next month to meet with Ukrainian developers and activists.
Bezos said that he was interested in expanding Amazon’s presence in Ukraine and creating more jobs for Ukrainians. He also said that he would donate $10 million to Ukrainian charities that help war-affected children and families.
