Despite the devastating impact of the large-scale Russian aggression, the Ukrainian economy continues to demonstrate resilience. The war has led to a range of interconnected problems and challenges faced by businesses, including the destruction of energy, transport, and other critical infrastructure, as well as the production facilities of certain enterprises; the continuous outflow of population from the country, which further destabilizes the labor market and restrains domestic demand; logistical difficulties; and other issues. Taken together, these factors significantly complicate business planning and suppress economic activity.
Nevertheless, thanks to a high level of adaptability to challenging conditions and systematic financial support from international partners, the Ukrainian economy continued to recover in 2024, albeit at a slower pace than in 2023. In 2024, GDP grew by 2.9%, compared to 5.5% in 2023.
2024 saw mounting inflationary pressures, with consumer inflation reaching 12% year-on-year. The main drivers of inflation were high production costs (rising prices for electricity, logistics, and raw materials, along with growing labor costs) and supply constraints (a poor harvest in 2024 due to drought, combined with growing export volumes, reduced the domestic supply of certain agricultural products). Inflation peaked in May 2025, accelerating to 15.9% year-on-year, but has since begun to ease, standing at 14.1% in July 2025. Overall, this downward price trend is expected to continue thanks to the gradual “exhaustion” of excessive cost pressures, along with prudent monetary and fiscal policies.
Public finances remain under severe strain. Since all domestic revenues are fully allocated to defense spending, civil government expenditures remain critically dependent on external financial assistance.
In such extraordinarily difficult conditions, the Government and the National Bank must constantly balance the need to stimulate economic growth, finance the budget deficit, curb inflation, ensure currency stability, and build up reserves.
The lack of sufficient capital continues to be one of the main challenges constraining business development. This is compounded by a relatively weak domestic market and limited opportunities to expand exports. At the same time, lending is becoming an increasingly important source of business financing.
Steady growth in bank lending to SMEs was observed throughout 2024. Currently, business demand for hryvnia-denominated loans is at its highest level since 2021. This trend is supported by improved lending conditions, particularly lower interest rates. The quality of the loan portfolio has also improved, with the share of non-performing loans showing a declining trend.
The revival of bank corporate lending has significantly reduced the need for state-subsidized loans. Nevertheless, the Government continues to implement the preferential business lending program “5-7-9%,” launched in 2020. Currently, lending under this program is carried out in the following priority areas: financing business entities in critical sectors of the economy, particularly manufacturing and agricultural production; reconstruction of fixed assets destroyed as a result of military aggression; support for businesses operating in areas where hostilities are or were taking place; financing of enterprises engaged in energy services and the construction and installation of energy generation facilities, among others. The practical implementation of the state financial support program is carried out through the integration of its priority conditions into banks’ own lending products.
In 2024, within the framework of the “Affordable Loans 5-7-9%” program, more than 25,000 contracts were signed for a total amount of UAH 94.7 billion, of which the largest volumes were issued for: working capital replenishment – UAH 23 billion; manufacturing enterprises – UAH 23.7 billion; loans in areas of military risk – UAH 21.9 billion; investment loans – UAH 20 billion. Thus, although the share of loans provided under the “5-7-9%” preferential business lending program in the total credit portfolio somewhat decreased in 2024, the program nevertheless remains an effective instrument of state financial support for business entities.