• What does the future
    hold for Ukraine

    why Ukraine has the potential to become the EU’s largest investment
    and renaissance hub when the war ends.



13 May 2022


Vitaliy Strukov,
Corporate finance Managing partner of BDO in Ukraine


  • Ukraine is the second largest country in Europe and has a coastline along the Sea of Azov and the Black Sea. It covers about 600,000 km2, with a population of about 42 million. It was about 47 million before 2014, when Russia annexed Crimea and occupied part of the Donetsk and Lugansk regions of Ukraine. Russia started a war against Ukraine in February 2022. As a result, around 10.5 million people have moved from their homes, including four million people, mainly women and children, leaving Ukraine as refugees, and about 6.5 million moving mainly to Western Ukraine
  • Ukraine has been named one of the largest agriculture and food producers/guarantors for world food security
  • According to the Global Sourcing Association, Ukraine is the #1 outsourcing destination globally and has more than 200,000 highly-skilled IT professionals
  • Many IT and tech start-ups have originated from Ukraine and their founders raised USD 2.35bn in 2021 (mainly not accounted for in the M&A market size of Ukraine as most of these start-ups’ head offices moved to either the US or the EU).



From 2009 to 2013 Ukraine saw continuous GDP growth, reaching USD 183.3bn in 2013. However, as a result of Russian aggression against Ukraine in 2014, which saw Russia annex Crimea and occupy part of the Donetsk and Lugansk regions, the Ukrainian economy and investment climate collapsed. In 2014 GDP fell by 21.1% to USD 131.8bn and in 2015 dropped by another 31.3% to USD 90.6bn, a fall of 50% in just two years. As a result the country’s M&A market dropped from about USD 4bn in 2013 to USD 410m 2015.

At the end of 2014/beginning 2015 the conflict was frozen in Eastern Ukraine, while part of the Donetsk and Lugansk region was left under occupation and was no longer under Ukrainian control. The economy started to recover with Ukraine’s Government making economic, legal and regulatory reforms towards the implementation of EU standards. As a result, the investment climate improved and the M&A market grew to USD 1.6bn in 2019. However, as with all economies around the world, the COVID-19 pandemic had a severe impact, and the M&A market declined sharply to USD 190m in 2020. After most COVID-19 restrictions were lifted, and due to pent-up demand, 2021 was a very successful year for the country’s economy: GDP grew to almost USD 200bn, overreaching 2013 levels, and according to estimates the M&A market reached almost USD 2.7bn with 120 deals. However, a few big deals which were signed at the end of 2021 are still pending and are not yet closed, with buyers citing ‘adverse change clauses’.


In 2013, the most active sectors in the country’s M&A were agriculture and food, banking, FMCG, energy and TMT. In 2021, TMT became Ukraine’s biggest growth industry and exports of outsourcing and programming services reached USD 6.8bn (five times higher than the USD 1.3bn recorded in 2013). According to the Global Sourcing Association, Ukraine has become the #1 outsourcing destination globally and is home to more than 200,000 highly-skilled IT professionals. The restart of the big and medium-sized privatisation of state-owned enterprises became an additional driver of the country’s M&A market. In 2021 there were 36 M&A deals worth USD 813m in TMT, 19 deals worth USD 234m in the agro sector, 10 deals worth USD 124m in Energy, Mining & Utilities, and six deals worth USD 650m in Real Estate and Construction. The tension arising from the deployment of Russian army to the Ukraine-Russia border has effectively frozen the market from December 2021.


From February 2022 onwards, the war has completely disrupted maritime trade (amounting to half of the country’s total trade and 90% of its grain trade); it has heavily damaged the country’s critical infrastructure and has triggered a massive displacement of people. In a March 2022 report, the World Bank forecasted that Ukraine’s GDP would drop by 45% this year and that there would be a weak recovery thereafter.

Projections, given the ongoing conflict, are subject to great uncertainty and large downside risks. These projections are predicated on massive declines in imports and exports, given the trade disruptions and the blockade of the Black Sea ports, a collapse in public and private investments and a big drop in household spending, reflecting the displacement of large numbers of people, loss of incomes and livelihoods.

Over the medium-term, the damage to Ukraine’s production and export capacity and loss of human capital are expected to have lasting economic and social repercussions. A major reconstruction effort is going to be necessary, complemented by institutional, structural and financial sector reforms to support private sector-led growth, but this will all be contingent on achieving substantial external financing on concessional terms.