Ukraine & Russia’s Economies — Who’s Performed Better?

Jakub Ferencik
6 min readMay 7

We’ve all been hearing doom and gloom regarding the performance of Russia’s economy from the many unprecedented sanctions packages from the EU to their disastrous performance in Ukraine.

But the reality is that Russia’s economy has been performing fairly well given the circumstances, namely the huge exodus of hundreds of thousands of Russians and the loss of a great amount of foreign investment and trade.

At the same time, much of Eastern Ukraine has been deeply affected by displacement, destroyed architecture, and ceaseless bombing.

So, who’s doing better?

Photo by Rostislav Artov on Unsplash

By the beginning of the 21st century, only 2 to 3 percent of Ukrainians claimed to lead lives that they are comfortable with. More than half of Ukrainians were barely able to afford food.

Since then, Ukrainians have been able to live more comfortably with each passing year. Putin’s full-scale invasion changed the trajectory toward relative prosperity.

Ukraine’s Economy & Performance

Most of the displaced Ukrainians as a result of the war come from the Donbas (Eastern Ukraine), where more than 20% of Ukraine’s GDP comes from.

Much of the fighting will probably continue in Donbas if Ukraine has enough ammunition to continue its successful counteroffensive.

The Ukrainian economy is not performing as badly as it could be under these conditions.

In Ukraine’s capital, Kyiv, and across Ukraine’s major cities, businesses are running under business-as-usual conditions.

Ukrainians are doing everything they can to maintain the appearance and feel of life under normal conditions, which is understandable because there doesn’t seem to be another option for the time being. Many have thus become accustomed to the sound of bomb sirens and cope accordingly.

Serhiy Marchenko, Ukraine’s finance minister, says that “Domestic consumption is keeping [the Ukrainian] economy afloat.” Domestic VAT receipts are 40% higher than in February to April, he claims. This resilience of Ukrainians has directly helped keep the Ukrainian economy afloat.

Jakub Ferencik

Author of “Up in the Air” & “Beyond Reason” available on AMAZON | MA McGill Uni | Research assistant for EUROPEUM Prague | 700+ blog posts with 1+ mil. views