The World Trade Organization completed its review of Ukraine’s trade policy and practices last week, releasing a report highlighting the countries resilience in the face Russia’s full-scale invasion which began three years ago.
The accompanying resolution condemning the Kremlin’s aggression was adopted by 54 WTO members, although the U.S. delegation abstained, reflecting Washington’s changed allegiances in the conflict.
The report underscores the severe consequences of war on the nation’s economy while emphasizing resilience and ongoing structural reforms. Covering developments from 2017 to 2024, the report outlines significant shifts in trade, investment, and economic policy amid ongoing geopolitical instability.
Despite being classified by the World Bank as an upper-middle-income economy, Ukraine has “the lowest GDP among 15 emerging and developing economies in Europe in per capita terms,” standing at just over $5,500 in 2024. The war, which led to the imposition of martial law in February 2022, has inflicted “severe human costs, substantial economic losses, and considerable environmental harm,” while exacerbating longstanding economic challenges such as “low investment, a declining trade-to-GDP ratio, and weak productivity growth.” However, the economy has shown “considerable resilience,” with growth rebounding by 5.3% in 2023 after a sharp 29% contraction in 2022.
The report notes a sharp decline in Ukraine’s trade-to-GDP ratio, falling from nearly 106% in 2016 to 78% in 2023. The war led to a 33% drop in export value between 2021 and 2022, raising “concerns about global food security due to Ukraine’s traditional role as a major exporter of agricultural products.” However, exports of cereals and sunflower oil have continued through alternative routes, albeit “under precarious conditions.”
Ukraine’s trade composition has undergone profound changes. The share of agricultural goods in total exports has “more than tripled between 2008 and 2023 (from about 17% to close to 61%),” while iron and steel exports—previously a mainstay—have declined from 38% to 7% over the same period. Simultaneously, Ukraine’s trade direction has shifted dramatically, with the European Union now accounting for “nearly 65% of the total value of Ukraine’s goods exports, up from 27% in 2008.”
A promising area of growth highlighted in the report is digitally delivered services, where Ukraine has emerged as a strong performer. The value of such exports, primarily “computer and other business services,” reached $9.4 billion in 2023, growing at an average annual rate of 16%—faster than in any other region, including Asia.
Despite these strengths, Ukraine continues to face formidable obstacles. The report cites persistently “low investment” as a major constraint, with gross fixed capital formation standing at just 17% of GDP in 2023. Foreign direct investment (FDI) has been hampered by “weak institutions, gaps in the implementation of laws and regulations, the widespread presence of inefficient state-owned enterprises (SOEs), an underdeveloped financial system, and more recently, the uncertainty created by geopolitical tensions.” Trade costs have also increased and remain “about 14% higher on average than in the European Union.”
To address these challenges, Ukraine has pursued institutional and economic reforms. The report notes progress in judicial system improvements, including the establishment of a High Anti-Corruption Court in 2019. Ukraine has also embraced digital governance, aiming for a “state in a smartphone” to enhance transparency and efficiency in public administration. Further, the country has modernized its intellectual property regime to align with EU standards, amended customs procedures, and reformed its trade policy to integrate more closely with the European Union.
The review also highlights Ukraine’s active engagement in global trade governance. “Despite the challenges of the war, Ukraine continues to engage actively at the WTO,” participating in major agreements and dispute resolutions. Ukraine has updated regional trade agreements, with the Association Agreement with the EU playing a particularly influential role. “In June 2022, Ukraine was granted candidate status for accession to the European Union, followed by the opening of accession negotiations one year later.”
Energy security remains a critical concern, as Ukraine’s electricity infrastructure has suffered “sustained attacks,” leading to frequent blackouts and turning the country from a net exporter to a net importer of electricity in 2022. In response, Ukraine has synchronized its grid with Europe and promoted decentralized electricity generation. The country has also sought to enhance its role in global supply chains for low-carbon technologies, leveraging its reserves of critical minerals such as lithium, titanium, and graphite.
Recognizing that private investment will be essential for reconstruction, the report underscores that “the cost of Ukraine’s recovery and reconstruction is estimated at USD 486 billion over the next decade, according to the World Bank.” To encourage investment, Ukraine has introduced new incentive schemes and worked with international partners to provide insurance against war-related risks.
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