The full-scale war significantly transformed the economic structure of Ukraine

The full-scale war significantly transformed the economic structure of Ukraine and exacerbated regional disparities. The frontline and border regions suffered the greatest losses, while the western regions became key centers for the relocation of business and labor.

This is stated in a new study by the National Bank of Ukraine, which was included in the thematic materials of the regulator's Inflation Report. Analysts note that the war not only changed economic activity, but also actually rewrote the regional map of the country's development.

According to the NBU, during the years of the full-scale war, the gap between regions in terms of economic activity increased significantly. The closer the region is to the combat zone, the greater the losses it suffered and the slower the recovery of business activity.

The regulator identifies four main groups of regions depending on the level of security risks and the scale of destruction. The frontline regions include the regions with the greatest destruction; Border regions regularly experience cross-border shelling; conditional border territories do not share a land border with Russia, but remain in a high-risk zone due to critical infrastructure; rear areas do not border the Russian Federation or temporarily occupied territories.

Separately, the NBU emphasizes that the western regions of Ukraine have become the main centers of relocation of business, capital and labor resources. This has further exacerbated the economic asymmetry between the regions.

Analysts note that the dynamics of economic activity generally repeats the map of destruction. After a sharp drop in business expectations in February 2022, the regions began to recover unevenly, and the key factor was not so much the economic base, but proximity to hostilities.

The greatest risks to recovery, according to the NBU, remain precisely in the front-line and border regions. They may enter the post-war period with the weakest starting conditions due to significant destruction and depletion of economic potential.

The regulator emphasizes that to prevent the formation of depressed regions, only physical restoration of infrastructure is not enough. A comprehensive state policy is needed, which will include the return of the population, the development of risk insurance and attracting investment in the most affected areas.

The National Bank of Ukraine also declares further support for the restoration of regions by ensuring macro-financial stability and developing lending. The regulator notes that thanks to the implementation of the Lending Development Strategy and targeted state support since mid-2024, the pace of lending in front-line regions has already caught up with other regions.

The NBU emphasizes that the issue of regional economic restoration will remain one of the priority areas of analytical and regulatory work in the future.