War in Ukraine – Ukrainian economy falls 20 years behind – News

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The war has largely brought Ukraine’s economy to a standstill. Gross domestic product fell by almost a third in 2022. One in four people now lives below the poverty line. But there are rays of hope in individual sectors.

The export of IT services to Ukraine brought in more than seven billion US dollars in 2022 – around three and a half percent of economic output. A Swiss company also benefits from this: the digital advertising marketer Audienzz.

The company has been employing Ukrainian software developers for many years. The outbreak of war came as a shock to technical director Mirko Mikulic: “Some people went to the front voluntarily, others were drafted, many migrated.”

Paradox: After more than a year of war, Audienzz no longer feels much of the tense situation in the country in everyday business. And that despite the fact that 13 employees still work from the Ukraine. how come Mikulic sees the reason in the fact that Ukraine definitely didn’t want to lose orders from foreign companies. “Our employees were even encouraged by the government to continue working.”

25 Ukrainians are still working for us: 12 from abroad, 13 still from Ukraine.

20 years of growth are gone

For war-torn Ukraine, the export of such IT services is at best a ray of hope in dark times. Gross domestic product fell by almost a third in 2022. At the same time, prices rose by more than 20 percent.

Inflation is making the real state of the economy even more dramatic, says Manuel Oechslin, Professor of International Economics at the University of Lucerne: “With the first year of the war, 21 to 22 years of growth are simply down the chimney.” However, because of the international aid, Ukraine can hope that the economy will have recovered after about ten years, ideally when the war ends.

With the first year of war, 21 to 22 years of growth is easy down the chimney.

Investments are the exception

For that to succeed, on the one hand, Ukrainian refugees would have to come back into the country. On the other hand, massive investments are needed in the destroyed infrastructure and in new businesses. But as long as the war lasts, only a few companies dare to invest in the crisis area.

Nestlé, which already has a presence in the country, is building a new food factory in western Ukraine. The glass manufacturer Vetropack is rebuilding its factory near Kiev, which was damaged after the beginning of the war. And dozens of others, like the industrial company Weidmann, have at least not closed their sites in Ukraine.

Legend:

Despite the war, Nestlé invests

The food company is building a new factory in western Ukraine.

Getty Images / Bloomberg / Vincent Mundy

One reason for the reluctance: investments in the war-torn country are currently not covered by the SERV export risk insurance. To change that, Parliament would have to change the law.

Dmytro Sidenko, President of the Ukrainian-Swiss Business Association, is calling for Switzerland to rethink: “I can’t imagine anyone investing time and money in Ukraine without guarantees.” According to Sidenko, whether a state insures such unattractive risks for its companies is ultimately also a question of political responsibility.

Reconstruction costs over 400 billion dollars

What official Switzerland has already done: In 2022 it invested around 55 million francs in Ukrainian infrastructure projects – a large part of which went into improving the railway network.

In view of the horrendous costs that Ukraine will have to face for reconstruction, this is at most a drop in the bucket. The World Bank recently put the investment requirements in the event of a quick end to the war at over 400 billion dollars.