Rising from the ashes: The impact of war on Ukraine's economy and the significant losses faced by businesses.
Ukraine has lost hundreds of enterprises and thousands of hectares of land during the war with Russia. Steel production has decreased threefold, the area of arable land has shrunk by a quarter, and the incurred losses are estimated in the tens of billions of dollars. What other losses has the business faced in nearly three years of war - in the material by RBC-Ukraine journalist Dmitry Sidorov.
Contents:
- The biggest blow - to the industry
- Losses in the agricultural sector
- Infrastructure losses
- Business adaptation
According to estimates from the Kyiv School of Economics (KSE), the direct losses to the Ukrainian economy from the war amount to about $88 billion. This figure does not account for the loss of housing, access to educational, medical, and other social services.
"The enemy is also waging war against the economy of Ukraine. The biggest losses are the assets of our industry, part of the agricultural land that has come under occupation, and, of course, we have lost many energy facilities," says Vladimir Vlasuk, director of the state company "Ukrpromvneshexpertiza," which conducts marketing and analytical research in the field of economics, to RBC-Ukraine.
The biggest blow - to the industry
Among the industrial sectors, metallurgy has suffered the most, according to the KSE report. Three large metallurgical enterprises - "Azovstal", "MMK named after Ilyich", and Avdiivka Coke Plant - have been significantly destroyed and are currently under temporary occupation. All three enterprises are part of Rinat Akhmetov's "Metinvest" group.
Before the full-scale war, "Azovstal" and "MMK named after Ilyich" produced about 9-9.5 million tons of steel annually and exported this product for about $5 billion each year, notes Vladimir Vlasuk. "Our pre-war export of all goods was about $60 billion a year, so losing $5 billion is quite a significant share," the spokesperson added.
The city of Pokrovsk in the Donetsk region, which is home to Ukraine's only "Pokrovsk Mine Management" facility for coking coal extraction necessary for metallurgy, is currently under threat of capture. On January 14, the "Metinvest" group announced that it was suspending coking coal extraction due to worsening safety conditions for workers.
The company noted that to ensure its enterprises with coking coal, reserves had been created at the metallurgical plants, supplies from other producers are planned, and "Metinvest" will supply coal from its subsidiary coal mining company United Coal Company operating in the USA. The use of imported coking coal will increase the production costs of Ukrainian metal products and reduce their competitive position in the global market.
Speaking of the latter, it should be noted that according to the World Steel Association, during the pre-war years of 2019-2021, Ukraine produced 20-21 million tons of steel annually and ranked 12th to 14th in the world ranking. As a result of the war, steel production has decreased by 3.5 times.
In 2022-2023, our metallurgy produced 6.2-6.3 million tons annually and ranked 24th to 25th in the global standings. According to the "Ukrmetallurgprom" association, in 2024 Ukraine managed to produce 7.6 million tons of steel, which is 22% more than in 2023, production of pig iron increased by 18% - to 7 million tons, and the volume of rolled metal increased by 16% - to 6.2 million tons.
Ukraine is gradually restoring steel and pig iron production volumes at surviving plants (infographic by RBC-Ukraine)
"This is a positive trend, but unfortunately, it does not fully reflect the state of the industry. The enterprises that remain in controlled territories (Interpipe, "ArcelorMittal Kryvyi Rih", "Zaporizhstal") produce less than before the full-scale invasion. In 2023, they produced about 50% of the 2021 figures. This is influenced by a number of factors, including safety concerns, interruptions in electricity and water supply. Global prices for iron ore and steel have fallen," explained Alexander Kalenkov, president of the "Ukrmetallurgprom" association, to RBC-Ukraine. The expert added that the biggest constraints on further steel production recovery are rising prices for electricity and railway transportation, as well as the aforementioned suspension of coking coal extraction.
Additionally, as Kalenkov noted, the production costs within the country have significantly increased. The price of electricity in dollars has risen by 94%, he reminded. The tariff for electricity transmission has increased by 30% in 2025 compared to 2024 - up to 686.23 UAH/MWh. Moreover, transportation costs for railways - for iron ore and coal - have risen by 1.2-1.3 times. Almost the only positive factor that worked last year was the "opening of the sea".
"The maritime route began to operate actively from October-November 2023. By the end of 2024, we achieved a result of 7.6 million tons of steel, but if all our enterprises in controlled territories had produced the volume that was achieved in 2021, we would have received 10.5-11 million tons," explained the president of the "Ukrmetallurgprom" association.
The war has also affected the related ferroalloy industry. Ferroalloy production involves electrometallurgy; thus, such enterprises are typically located near large power plants and require significant amounts of electricity for their operation, explained Sergey Kudryavtsev, executive director of the "Ukrainian Association of Ferroalloy and Other Electrometallurgical Products Producers." He stated that strikes on energy infrastructure negatively impact their operations. Additionally, logistics restrictions caused by the war significantly complicate the export of finished products and the import of ore from Australia and Africa.
"Currently, several ferroalloy enterprises operate at a level just to maintain personnel. There is no talk of large-scale exports or a domestic market," Kudryavtsev said, adding that even the operation of the maritime route does not save the situation for the ferroalloy industry, as export batches are small and do not cover the costs of maritime logistics. Currently, Ukrainian ferroalloys are reaching Europe via rail transport.
Regarding the losses in the industrial complex, it is worth mentioning the capture of chemical enterprises by Russians, such as the "Benzol" plant in Bakhmut, the Severodonetsk "Azot," as well as food industry enterprises, particularly the salt producer "Artemsol" (located in Soledar, Donetsk region) and a champagne factory in the same Bakhmut (the company Artwinery).
Russian aggression has hit the most industrially developed regions of Ukraine (infographic by RBC-Ukraine)
"The war has affected the structure of the economy, with the share of state management increasing. At the same time, the share of the processing industry in GDP formation, which before the war was 10.1-10.3%, has decreased to 8.2%. For comparison, this share is 18% in Poland and 23% in Turkey. Therefore, the share of industry today is very small, and specifically, the processing industry is the backbone of the economy," commented Vladimir Vlasuk.
Losses in the agricultural sector
Due to the war, Ukraine has become the most mined country in the world. This problem directly affects the operation of the agro-industrial complex, whose primary productive resource is fertile soil.
"According to estimates by the World Bank, direct and indirect losses for agriculture during the years of war reach over $80 billion. This includes infrastructure, production capacities, storage assets for grain, and so on. We see significant impacts on railway and port infrastructure. We have also lost about 25% of arable land," said Oleg Khomenko, CEO of the "Ukrainian Agrarian Club" association, to RBC-Ukraine.
According to him, since the fall of last year, during the active export of Ukrainian grain, the Russians have been trying to obstruct this as much as possible by striking at the infrastructure of Black Sea ports.
"This is our main route through which we export 90% of agricultural products; its functioning is crucial. This is a very sensitive moment. They (the Russians - ed.) are aware of