In 2024, real GDP was up 2.9%, according to detailed GDP data from the State Statistics Service of Ukraine (SSSU). On the one hand, GDP growth slowed relative to 2023 (down from 5.5%, revised SSSU data shows). On the other, the Ukrainian economy has been recovering for the second straight year amid a full-scale war and russia’s relentless attacks on production facilities and infrastructure.
The slowdown of growth in 2024 had been expected, given the worsening security situation, renewed power shortages, and poor harvests. Meanwhile, the economy was supported by strong domestic demand, loose fiscal policy, the strong resilience of businesses, and the NBU’s efforts to ensure macrofinancial sustainability.
The actual rate of real GDP growth came out lower than the NBU estimated in its January 2025 Inflation Report (3.4%). This was in part due to the renewed fall in GDP in Q4 2024 (down 0.1 pp) driven by a plunge in agriculture’s performance (by 30.3% yoy). It was also partially due to an increase in the comparison base as the SSSU adjusted upward the growth indicator for Q4 2023 within a traditional GDP revision.
Consumption continued to underpin economic recovery
Private consumption provided the largest positive contribution to real GDP growth in 2024. The rise in households’ final consumption expenditures picked up to 6.8%, fueled by rapid growth in real wages, SSSU data shows.
Although fiscal policy remained accommodative last year, the public sector’s role in the economy gradually declined. Specifically, the general government’s final consumption expenditures shrank 4.5% in 2024.
Capital expenditures from the budget and improved financial performance of enterprises drove investment
Last year, gross fixed capital formation gained 3.5% yoy. Private sector investment went primarily toward the development of logistics capacities and autonomous energy supply capabilities as power shortages reemerged. Public investment was allocated to rebuild infrastructure, pursue military objectives, and expand the defense industry.
Exports returned to growth, imports continued to rise
Export volumes in 2024 increased for the first time since 2019, by 10.3% yoy, driven primarily by the sea corridor’s uninterrupted operation. At the same time, the revival of domestic demand was largely made possible by imports, whose volumes added 7.7%. As a result, net exports’ contribution to real GDP growth remained negative (-0.9 pp), but was smaller than in previous years.
Economic performance was uneven by sector
Agriculture made the largest negative contribution to GDP growth in 2024. The sector’s gross value added (GVA) shed 7.3% for the year because of a lower harvest. Heat waves and droughts in the summer and early fall adversely affected yields, especially those of late crops. Declining yields led to higher feed prices, which impeded the development of livestock farming.
The resurgence of power shortages caused by renewed russian strikes against Ukraine’s energy infrastructure also weighed down economic growth. Although the situation remained relatively sustainable due to repairs and power imports, the energy sector’s GVA lost 2.7% for the year.
Energy deficits, ramped-up aerial strikes, and decreased volumes of raw agricultural products designated for processing hampered the development of the manufacturing industry. The growth in the sector’s GVA decelerated to 6%.
Thanks to increased gas and metal-ore extraction, mining returned to growth, with its GVA rising 3.6%. The smooth functioning of the sea corridor also had a significant impact, positively affecting the financial performance of metallurgy and transportation.
Although the trade sector’s GVA shed 4.1% in 2024, consumer demand remained robust, as evidenced by strong performance in the retail and services industries.
Loose fiscal policy continued to contribute significantly to GDP growth. High amounts of budget financing bolstered the sectors related to the manufacture of defense goods and led to an increase in the GVA of the public sectors. The GVA of the public administration and defense sector increased by 2.4% in 2024, education by 10.8%, and healthcare by 4.3%.
Capital expenditures from the state budget to build fortifications, repair vital infrastructure, and finance other rebuilding projects, along with investment inflows from the private sector, made sure that construction’s GVA grew fast (by 16.2%).
The sustainable operation of the financial system, including banks, contributed to the financial sector’s improved performance. In 2024, the sector’s GVA started growing again after two years of decline and marked the fastest increase of all industries (27.4%). Despite a slowdown from 2023 due to difficulty finding orders, the GVA of IT also grew at a high pace (up 8.3%).
In 2025, Ukraine’s economy will continue to grow
The uptrend will be driven by an anticipated increase in harvests, a drop in power shortages, and an uptick in external demand. As for headwinds, growth will continue to be restrained by the fallout from the war, including labor shortages and damage to infrastructure and production facilities.
The NBU will publish the main indicators of its updated forecast for 2025–2027 on 17 April 2025, during the monetary policy press briefing. More detailed data will be released on 24 April 2025 in the Inflation Report, as per the schedule.