Your wallet or your life: Ukraine is faced with a hard choice between military necessity and economic recovery

The first few months of the full-scale war came as a massive shock for Ukrainians, causing the unemployment rate to soar to almost 30% and nearly half of Ukrainian businesses to close down or reduce operations significantly, as the exchange value of the hryvnia plummeted. The national bank initially fixed the hryvnia to dollar rate at 29.25 hryvnias but had to devalue it to 36.57 in July 2022.

By the end of the first year of the war, Ukraine’s GDP had shrunk by 29.1%, hitting a record low in the history of independence. The inflation rate peaked at 26.6%.

In 2023, the situation took a turn for the better. The GDP grew by almost 5%, though this achievement largely owes to the low base effect. The inflation rate slowed to 5% — much to the surprise of analysts and authorities, who had offered grimmer forecasts. The price growth was tempered by large crop yields, lower energy carrier prices, a rigid monetary policy of the National Bank of Ukraine, and a freeze in utilities tariffs.

Although the National Bank of Ukraine let go of the hryvnia exchange rate peg, the currency did not sink all that low. It is currently fluctuating at around 38.28 hryvnias per $1.

Ukrainians’ salaries are on the rise too. At the end of Q3 2023, the average monthly income bordered on 18,000 hryvnias, according to Gosstat — the current equivalent of $490. To compare, Ukraine's average monthly income in 2021 was $525.