Page 20 - Ukraine OUTLOOK 2025

marking the largest foreign investment since the war began.
With Ukraine’s international partners increasingly focused on building out the domestic arms industry so Ukraine can equip itself, FDI in the military industrial sector is expected to continue to grow in 2025.
Back in 2021, Ukraine produced no ammunition and had total arms production worth $755mn. In 2024 it was Europe’s largest producer of ammunition. Drone exports alone are believed to be worth $20bn if the government gives permission for such sales.
Ukrainian arms manufacturers can attract up to UAH500M in soft loans through a state programme. In Ukraine, a preferential lending programme has been launched for manufacturers of the defence-industrial complex. The interest rate for manufacturers will be 5%. Loans of up to UAH100mn for working capital for up to three years and up to UAH500mn for investment projects for up to five years are available. Such credit will allow manufacturers to produce more weapons – and deliver them to the front faster.
EU countries have agreed to cooperate on weapons development in four areas. Groups of EU countries have signed letters of intent (LoIs) to jointly develop weapons in the following areas: integrated air and missile defence (18 countries), electronic warfare (17 countries), kamikaze drones (14 countries) and combat surface ships (7 countries). The provisions recorded in these LoIs range from short-term joint procurement to medium-term modernisation and improvement and long-term development of future capabilities.
Most Nato countries have already approached Ukraine regarding partnerships or the supply of military equipment. Ukrainian private arms manufacturers have been contacted by 20 of the 32 Nato member countries regarding partnerships or the supply of military equipment. Nato members Lithuania, the US, the UK, the Czech Republic and Latvia are the five countries from which Ukrainian manufacturers most often receive requests.
3.0 External Environment
• 3.1 Trade dynamics
Ukraine’s external accounts will remain under pressure in 2025, driven by a persistently large trade deficit and substantial foreign exchange (FX) cash withdrawals by households. However, foreign financial aid and other net-positive balance of payments (BoP) components are expected to mitigate such challenges, keeping the overall current account deficit manageable at
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