Ukraine's export performance is experiencing significant declines as of early 2025, with the information technology (IT) sector and agricultural products particularly affected. The challenges posed by the continuing geopolitical crisis have resulted in unprecedented low figures for the export of IT services and notable reductions in agricultural exports, leading to growing concerns about the future viability of these sectors.
According to recent reports, Ukraine's export of IT services fell below the $500 million mark for the first time since the onset of the war, recording only $499 million for January 2025. This is a decrease of $22 million or 4.2% compared to January of the previous year. Even more alarming is the 22.2% drop from December 2024, where exports typically peak. The overall earnings from services exported from Ukraine during the same month stand at $1.21 billion, which is down $423 million or 25.8% from the previous month. These statistics stem from calculations made by the Lviv IT Cluster utilizing data from the National Bank of Ukraine
Stepan Veselovsky, CEO of the Lviv IT Cluster, emphasized the gravity of the situation, stating, "January showed itself to be the worst since the start of the full-scale invasion. Last year's figure was $521 million, and it was $542 million back in 2023. The overall dynamic for 2024 has remained weaker than it was in 2023. According to our forecasts, the situation this year will not improve; the challenges of the full-scale invasion continue to negatively impact the tech industry.”
Further complicatings matters, the Ukrainian agricultural sector has also been hit hard. The total revenue generated by Ukraine's agricultural exports amounted to $24.6 billion, holding significant relevance as it accounts for the bulk of the nation's total export value of $41.6 billion recorded for the year. Despite this success, the composition of exports has undergone notable changes, especially with the European Union remaining the main market even as its share dropped from 61% to 52% due to tighter access.
During the July-January 2024/25 marketing year, Ukraine's wheat flour exports plummeted by 36.1%, totaling 40.4 thousand tons. This marks a stark drop from previous years, where 63.2 thousand tons were exported during the same timeframe of the 2023/24 marketing year and 79.8 thousand tons during 2022/23. Out of the current season's wheat flour exports, around 17 thousand tons were shipped to EU countries, almost 12.4 thousand tons to Moldova, and 8.1 thousand tons to Palestine.
It is worth mentioning the underlying circumstances affecting agricultural exports. Restrictions imposed by the EU, meant to facilitate trade liberalization, are set to continue through June 5, 2025. Although tariffs and quotas for most Ukrainian products have been suspended, there remain limitations on seven specific goods including eggs and sugar, complicate the exporting local producers’ plans.
Prior to these EU restrictions, the Ukrainian government implemented several preventive measures, including setting quotas on sugar export and limiting poultry meat exports to manage local production and avoid the reintroduction of EU tariffs. This demonstrates the uncertain environment exporters are facing.
Despite challenges, adaptation has been evident. Ukraine has actively sought to diversify its agricultural export markets beyond the European Union to regions such as Africa, the Middle East, and Asia, aiming for rapid growth of up to 30% annually. Diversification remains one of the government’s top priorities as it seeks new cooperative frameworks with up to 15 market parties globally for 2025.
On the IT front, the narrative surrounding export woes is underscored by significant contributions to the economy pre-war. During 2022, the Ukrainian IT industry sustained the economy with record revenues of $7.34 billion. The surge marked the first time the sector had exceeded $5 billion necessity since 2020, though exports fell to $6.7 billion by 2023, and again to $6.45 billion the following year. The disruption caused by the war has led to cascading issues, resulting from loss of key markets and workforce mobility.
Overall, as Ukraine navigates these tumultuous times, stakeholders from both the IT and agricultural sectors are calling for continued innovation and resilience against external variables. The pressing need for supportive legislation and market innovation remains pivotal for reversing these alarming trends and stimulating economic recovery.
Industry leaders and government officials alike understand the need for enhanced clarity as they prepare for upcoming changes. The status of agricultural exports remains uncertain as the government enacts measures to stabilize the market, but the overarching sentiment exhibits cautious optimism for improved conditions down the line.
With trade dynamics shifting and market demands fluctuated, Ukraine faces pivotal moments for the future of its export potential. Stakeholders continue to monitor and adapt to these rapidly changing circumstances and engage strategies to offset the risks involved moving forward, aiming for resilience amid adversity.