Post-COVID-19 crisis: the current and the future impact on Ukraine's economy?
The impact of COVID-19 on Ukraine's economy is twofold. On the one hand, it had clear short-term negative economic consequences, primarily in 2020. Real GDP declined due to a sharp drop in gross fixed capital formation as investment plans were disrupted. Exports also fell though less than imports. Despite initial expectations, consumer spending slightly increased: higher consumption of goods replaced services unavailable due to restrictions.
On the other hand, its longer-term impact should be still analysed and is not straightforward. The pandemic changed government policies and likely created some new challenges for economic agents. Economic recovery in many countries, helped by loose fiscal policy, already resulted in a surge in prices on commodities, including key Ukrainian exports such as iron ore, steel, grain and sunflower oil. Moreover, the high demand of European consumers for natural gas was not met by an increase in gas supplies by Russian Gazprom.
This article is an attempt to explore the COVID-19 impact on Ukraine's economy in 2020 and beyond. It was inspired and similar to the short analysis published for the Moldovan economy within the 3DCFTA project.