Page 22 - Ukraine OUTLOOK 2025

strong contributors to import growth.
Export recovery, while notable in 2024 (+13% y/y to the end of October), is slowing. Deliveries of goods abroad account for just 55% of total goods imports, with exports likely to decelerate in 2025 as the initial benefits of the reopened Black Sea shipping routes for non-agricultural cargo fade.
“There are no reasons to expect the gap to start narrowing,” ICU analysts commented, adding that the trade deficit is likely to remain a significant drag on Ukraine’s external accounts.
The 2024-2025 grain export season is potentially more successful than the previous two. The Ukrainian Agrarian Confederation believes that the current marketing year, from July 2024 to June 2025, may become more successful for Ukrainian grain traders and farmers than the previous two seasons. This depends on the continued operation of the grain corridor and the preservation of the current security situation in Ukraine. The main growth factors are an increase in global food prices and greater free capacity in export infrastructure.
The key exporting countries and regions with which Ukraine has to compete are Latin America (Argentina and Brazil), Canada, Australia, the EU and Russia.
Financial account under strain from FX outflows: The financial account is expected to remain net positive despite record-high outflows of FX cash from the banking system, which could exceed $16bn in 2024. These withdrawals are attributed to households favouring FX cash as a safe haven, even with the hryvnia’s relative stability and high yields on hryvnia-denominated assets.
Analysts suggest that FX withdrawals are also being used to bypass capital controls imposed by the NBU, facilitating payments for shadow imports or being transported abroad.
A significant positive development in the financial account is the reversal of capital flight via trade credits. “Businesses are now more willing to transfer FX export proceeds to Ukraine,” analysts noted, marking a shift from the earlier trend of retaining proceeds abroad.
Outlook remains fragile: While foreign aid is anticipated to stabilise Ukraine’s external accounts, the persistent trade deficit and substantial FX outflows underscore the structural vulnerabilities of the economy. Without significant improvements in trade dynamics or additional foreign investment, external account pressures are likely to persist in the near term.
The balancing act between robust import demand, weakening export growth and external financial support will define Ukraine’s economic resilience in 2025.
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