As Ukraine approaches the third anniversary of Russia’s full-scale invasion, questions are being raised about the country’s ability to sustain the war effort. While military strength determines battlefield success, long-term wars are ultimately won by economic resilience. With foreign aid decreasing and internal economic challenges mounting, can Ukraine afford to continue fighting?
Ukraine’s Economic Struggles Amid War
Despite its geographical size, Ukraine is significantly smaller than Russia in terms of population, economic strength, and natural resources. Before the full-scale invasion in 2022, Russia’s economy was estimated to be ten times larger than Ukraine’s.
The war has triggered the country’s worst financial crisis in decades, comparable to the economic turmoil that followed the collapse of the Soviet Union in the 1990s. Since February 2022, Ukraine has allocated the majority of its budget to defense, leaving other key sectors—such as healthcare, education, and public services—underfunded. This has resulted in a significant budget deficit.
To cover these financial shortfalls, the Ukrainian government initially relied on selling bonds and printing money. By the end of 2022, Ukraine’s economy had contracted by nearly 30%, and inflation had risen to 25%. However, international financial assistance played a crucial role in stabilizing the economy.
International Aid: A Critical Lifeline
Initially, the United States was Ukraine’s largest donor, providing financial, military, and humanitarian aid. However, in recent months, the European Union has taken over as the primary financial backer.
Between 2022 and 2024, Ukraine received over $115 billion in international aid, mainly in the form of loans and grants. This included:
- $44.8 billion from the European Union
- $31.2 billion from the United States
- $12.4 billion from the International Monetary Fund (IMF)
Additionally, in 2024, the G7 pledged a $50 billion special loan using frozen Russian assets to support Ukraine’s economy. In 2025, Ukraine expects to receive $38.4 billion in aid from international allies.
Impact of Foreign Assistance
Ukraine’s economy has shown signs of recovery due to foreign aid. Official estimates suggest that GDP grew by 5.3% in 2023 and 3.6% in 2024. International funding has helped the country:
- Stabilize foreign exchange reserves
- Maintain the value of its currency
- Address the budget deficit
However, Ukraine requires $40 billion annually to sustain the war effort. Economic expert Dmytro Boyarchuk warns that a loss of foreign aid could have devastating consequences.
Economic Challenges: Energy, Labor, and Industry
Beyond financial constraints, Ukraine faces additional economic challenges, including energy shortages and a shrinking labor force.
Energy Crisis
Russian forces have deliberately targeted Ukraine’s energy infrastructure. The Ukrainian Energy Ministry reports that over 1,000 energy facilities have been damaged or destroyed since October 2022. More than half of Ukraine’s pre-war power generation capacity is no longer operational.
While nuclear power plants continue to provide energy, electricity imports and renewable sources are struggling to compensate for the shortfall.
Labor Shortages
Ukraine’s labor force has been severely impacted by the war. A combination of casualties, migration, and ongoing military conscription has resulted in a workforce decline of nearly 30%.
Currently, 880,000 Ukrainians are actively serving in the military, according to President Volodymyr Zelensky. Meanwhile, the United Nations estimates that seven million Ukrainians have sought refuge abroad, primarily in Europe, while an additional 4.6 million remain internally displaced.
Can Ukraine’s Economy Survive?
Despite these challenges, the International Monetary Fund (IMF) has stated that Ukraine’s economy remains resilient. However, continued foreign aid remains essential.
Andriy Pyshny, head of Ukraine’s National Bank, warns that Ukraine’s defeat would have global consequences, including:
- A surge in food insecurity
- A new wave of refugees
- Increased global military spending, reducing funds for economic development
Ukraine’s Economic Adaptation
Despite heavy reliance on foreign assistance, Ukraine has demonstrated economic resilience.
After Russia withdrew from the Black Sea Grain Corridor Agreement, Ukraine and its allies developed an alternative shipping route through the Black Sea to continue exporting agricultural goods.
This effort allowed Ukraine to restore agricultural exports to pre-war levels and resume exports of other commodities. In 2024, Ukrainian exports increased by 15%, generating over $41.6 billion—an amount nearly equal to the foreign aid received that year.
2025 Outlook: Can Ukraine Continue Fighting?
In 2024, Ukraine spent $52 billion on defense, averaging $142 million per day. The 2025 national budget allocates $49 billion to military spending, which accounts for over 25% of Ukraine’s GDP.
Non-military spending will be covered primarily through international aid and increased domestic taxation. However, raising taxes may hurt businesses and reduce revenues.
The Ukrainian Finance Ministry remains confident that promised international aid will arrive on schedule. However, the return of Donald Trump to the White House adds uncertainty. While the Biden administration secured multi-year aid agreements, Trump’s administration may reverse or renegotiate funding.
War or Peace? The Diplomatic Challenge
Diplomatic efforts continue, with ongoing discussions involving the United States, Russia, Ukraine, and European leaders. However, the prospect of a lasting peace remains uncertain.
For Ukraine, the war effort depends on two critical factors:
- Continued international financial aid
- The ability of the economy to withstand prolonged conflict
Without both, Ukraine’s ability to sustain its defense against Russia beyond 2025 remains in question.
