Analysis: Ukraine’s Economy Disrupted by War in a Potential Long-Term Shift

Architect Oleh Drozdov’s decision to move his home and business from Kharkiv to Lviv, over 1,000 km away, in the wake of the Russian invasion of Ukraine in 2022 has proven to be a strategic move. Despite the challenges posed by the ongoing conflict, Drozdov’s practice, Drozdov & Partners, is now seeing signs of growth as businesses adapt to the new reality.

In Lviv, a city close to the Polish border, cranes dot the skyline and new projects are underway, signaling a resurgence in economic activity. Drozdov’s practice, like many others, has benefited from the high demand for buildings and renovations in the region.

The mass migration of businesses from east to west Ukraine following the invasion has led to the registration of 19,000 companies in new locations, according to Opendatabot. This shift has transformed the Ukrainian economy into a wartime economy, characterized by resilience and adaptability.

While the eastern regions of Ukraine continue to bear the brunt of the conflict, western regions like Lviv and Zakarpattia are experiencing a surge in new businesses and investments. Foreign investments in sectors like mining, renewables, and manufacturing are flowing into these regions, driven by the prospect of Ukraine eventually joining the European Union.

Despite the challenges faced by businesses in the war-torn regions, there are signs of hope for the Ukrainian economy. With a rebound in growth and the expansion of sectors like construction and defence manufacturing, the country is slowly rebuilding and adapting to the new normal. As job vacancies increase in the west, businesses are facing staff shortages, highlighting the need for skilled workers in the rebuilding process.

Architect Oleh Drozdov’s vision of returning to Kharkiv one day to contribute to the rebuilding efforts reflects the resilience and determination of the Ukrainian people in the face of adversity. As the country navigates through difficult times, the spirit of innovation and adaptation shines through, paving the way for a brighter future.