In 2025, both Ukraine and Russia face severe economic strain under prolonged war conditions—but Ukraine shows surprising resilience, thanks to international support and smart policy.
🇺🇦 Ukraine’s Financial Health
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Economic growth: Forecasted at 2.0–3.0% GDP growth this year, down from 3–4% in 2024.
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Inflation: Accelerated to ~15% by April 2025, easing gradually toward 8% by year‑end under the ongoing‑war scenario.
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Budget deficit: Running at around 20% of GDP (~$40 billion) in 2025—reliant on G7/EU financial aid, including ~$58 billion of external assistance.
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Debt load: Public debt projected at ~106 % of GDP by end‑2025.
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Currency & reserves: Hryvnia strengthening slightly (≈ 41.5 UAH/USD), reserves boosted to nearly $59 billion by year‑end.
Ukraine continues functioning: shops stocked, credit cards accepted, ATMs working—despite war—a sign of strong state institutions and reform efforts Atlantic Council.
🇷🇺 Russia’s Economic Strain
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Growth slowdown: Real GDP growth down to 1.0–1.5% in 2025, after ~3–4% in prior years.
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Inflation & borrowing costs: Inflation at about 9–10%, and central bank interest rate still very high around 18–21% to rein in rising prices.
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Fiscal pressure: Military and security spending make up ~40% of total budget; off‑budget bank loans and defense financing push war spend to over 20% of GDP.
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Oil revenue crunch: Falling oil prices (~$52/barrel) cut into revenue that forms ~30% of budget, escalating fiscal risks.
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Labor & production: Manufacturing & services sectors show contraction; PMI data signals steep decline; mass layoffs reported across major firms.
💡 Key Drivers Behind the Numbers
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Western aid fuels Ukraine’s budget and reserves, including access to frozen Russian assets via G7/EU mechanisms.
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Energy infrastructure damage in Ukraine reduces industrial output, but businesses adapt with private generators and imports to maintain operations.
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Russia relies heavily on defense financing, including forced bank lending to war industries and tapping welfare funds—unsustainable long term.
🌐 Global Impact at a Glance
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Commodity squeeze: Ukraine and Russia supply ~30% of global wheat and sunflower oil, and their disruption has driven global food prices up ~20% since 2022, affecting poor countries most.
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Supply chain shocks: Disruptions in neon, palladium and agricultural exports continue to impact tech and trade worldwide, increasing costs by ~1‑2%.
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Policy spillover: ECB holds rates at 2% amid war‑related uncertainty, while US tariffs threaten oil imports that may influence future sanctions on Russia.
✍️ Conclusion
Ukraine faces serious fiscal strain, but thanks to reform, Western aid, and solid institutions, it stabilizes growth and inflation—even under war. Russia, meanwhile, grapples with overreliance on oil, crushing debt, and a contracting economy. Overall, the economic war favors Ukraine’s adaptive resilience—but both nations remain at risk without peace.