Three Years Into Russia-Ukraine War, A Look At Where Their Economies Stand

Ukraine is entering the fourth year of all-out war with Russia on Monday, unsure it can rely any longer on its staunchest ally the United States for financial and military commitment, as its economy showing signs of slump and its exhausted troops fight to hold their ground against unrelenting enemy advances. The war ordered by Russian President Vladimir Putin has not been kind to Moscow as well, with its economy showing the first signs of cooling due to inflation.

Ukraine’s President Volodymyr Zelenskiy said on Sunday he was willing to give up his position if it meant peace in Ukraine, quipping that he could exchange his departure for Ukraine’s entry into NATO. “If (it means) peace for Ukraine if you really need me to leave my post, I am ready,” an irritated-looking Zelenskiy said when asked during a press conference whether he was ready to leave his post if it meant securing peace.

“I can exchange this for NATO (membership), if that condition is there, immediately,” the president added.

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US Changing Stance

Since taking office for the second term on January 20, US President Donald Trump has pushed for elections to take place in Ukraine, having branded Zelenskiy a “dictator”, an apparent reference to the Ukrainian leader’s official five-year term running out in 2024. He has also appeared to accuse Ukraine of being responsible for the war, which Russia started when it waged a full-scale invasion three years ago.

Trump’s criticism of Zelenskiy came as relations between the two leaders deteriorated sharply in recent weeks. Zelenskiy has opposed the idea of elections during a full-scale war, a position supported by his major domestic political opponents.

The Ukrainian president also said he wanted to see Trump as a partner to Ukraine and more than simply a mediator between Kyiv and Moscow. “I really want it to be more than just mediation… that’s not enough,” he told a press conference in Kyiv.

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However, Trump wants to get money back for the billions of dollars sent to support Ukraine’s war against Russia. Washington is negotiating with Kyiv a mineral resources deal Trump wants as compensation for the wartime aid his predecessor Joe Biden gave Ukraine.

But, in exchange Ukraine wants any agreement signed with the United States to include security guarantees as it battles Russia’s nearly three-year invasion.

Meanwhile, the Trump administration has initiated talks with Moscow to discuss the ending of the war in Ukraine after reestablishing diplomatic relations. So far, Kyiv has been kept out of the negotiations. 

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Economic Strains Of War On Russia And Ukraine

It was clear from the beginning that Putin’s war in Ukraine would be a global economic disaster. Inflation figures released on either side of the border showed the continued toll the conflict has had on citizens of both neighbours – with price rises running at 9.5 per cent in Russia and 12 per cent in Ukraine.

Per International Monetary Fund (IMF) data, Russia’s gross domestic product (GDP) slumped to -1.3 per cent at the outset of the war but has since recovered to post 3.6 per cent in each of the last two years. But now the Russian economy is showing the first signs of cooling, with sales and orders falling in various sectors due to high interest rates and inflation. 

“Already based on the results of November and especially December, we see that growth has stopped being frontal…The pace has slowed in a number of industries: the food industry, the chemical industry, wood production, and certain sectors of machine building…The volume of orders from businesses is decreasing,” Russia’s Economy Minister Maxim Reshetnikov said recently.

He said his ministry was working with the central bank and finance ministry to link monetary and fiscal policy. “We are looking for a balance between curbing inflation and economic growth,” Reshetnikov was cited as saying.

So far, despite wide-ranging US and European sanctions, Russian factories have continued to source the components and raw materials needed to keep the war machine going, according to a report by The Guardian. 

Per the report, the influx of funds from the illicit sale of oil, and to a lesser extent natural gas, nickel and platinum, has allowed for an expansion of a state apparatus that 18 months ago looked on its knees.

Meanwhile, Ukraine is holding better as an independent nation as its GDP, which sunk 36 per cent by the summer of 2022, rebounded to 5.3 per cent in 2023 and 3 per cent in 2024. But, according to Ukraine’s economy ministry forecast, GDP growth is expected to slow to 2.7 per cent this year, below the 3-4 per cent expected by most Ukrainian analysts and economists.

Ukraine is holding strong on its electricity market and metal deposits. Per The Guardian report, imports of electricity have jumped by a half from 123GWh to 183GWh from January 2024 to last month, and exports have soared from just 5GWh to 85GWh over the same period.

Looking to the next 10 years, Ukraine has a wealth of metal deposits, many of them rare, that some estimates put at $11tn.

Losses On Ground

Thousands of Ukrainian citizens have died and over 6 million live as refugees abroad since Russian President Vladimir Putin ordered the invasion by land, sea and air.

Military losses have been catastrophic, although they remain closely guarded secrets. Public Western estimates based on intelligence reports vary widely, but most say hundreds of thousands have been killed or wounded on each side.