Economy of Ukraine at war: what are Ukraine’s major industries?

Ukraine has always had a diverse economy, with several leading industries driving its growth. Its fertile soils, educated and highly trained labor force, mineral resources, and industrial base allowed the country to develop robust agriculture, energy, IT, and other competitive sectors.

Even though the full-scale war Russia started against Ukraine two years ago dealt a significant blow to the Ukrainian economy in 2022, bringing the destruction of Russian air strikes and shelling and causing brain outflow of Ukrainian refugees, the country remained resilient and experienced real economic growth of 5% in 2023, according to the International Monetary Fund (IMF).

Rubryka shares five major industries in Ukraine, a country with enormous investment potential and a resilient economy amid war.

Agriculture is one of Ukraine's most vital industries. Often called the "breadbasket of Europe," Ukraine plays a crucial role in global food security, supplying food to 600 million people worldwide, including in vulnerable countries of the Middle East and East Africa. By 2021, agriculture accounted for 41% of Ukraine's exports, valued at $27.8 billion. In 2022, it contributed about 8.2% to Ukraine's GDP. 

Ukraine has built its agricultural dominance thanks to its vast lands and highly fertile black soils, called Chernozem, which cover two-thirds of its territory. With its 8,600 medium-sized farms, Ukraine is a leading producer of grains, yielding 32 million tonnes of wheat, 42 million tonnes of maize, and 9.4 million tonnes of barley in 2021. Ukraine is also the world's largest producer and exporter of sunflower oil. 

Ukrainian agriculture has been a significant target of Russia, which stole 19.3% of Ukraine's arable land, including some of the most fertile land and crops, causing $80 billion in losses. Agriculture remains a critical component of the Ukrainian economy and Ukraine's major industry, accounting for over 50% of exports.

Find out more about how Ukrainian farmers deal with the challenges of war here.

Historically, the Ukrainian economy has had a strong energy sector — the oil and gas, hydroelectric power, coal, and nuclear industries — forming 14% of Ukraine's GDP. In 2021, the country operated 15 nuclear reactors, which generated 54.6% of its electricity, with hydroelectric power plants and thermal power stations contributing around 38.7%. Renewable energy, including hydro, wind, and solar power, has also been booming in energy production (11.1% in 2021).

Ukraine is rich in energy resources, including coal (7th in the world), natural gas, and strategic raw materials like granite, graphite, beryllium, and rare earth elements. As a country with diverse mineral deposits, Ukraine has enormous potential for investments and can meet Europe's needs in terms of crucial resources. Ukraine is also the world's tenth-largest producer of uranium, accounting for 0.64% of global production.

Russia's war has heavily impacted the Ukrainian energy sector. First, Russia occupied Ukraine's coal-rich eastern regions in 2014. Then, it destroyed thermal and hydroelectric plants and captured renewable energy stations and Europe's largest Zaporizhzhia Nuclear Power Plant in 2022. While Ukraine's energy sector suffered almost $40.4 billion in losses, the country is committed to achieving energy independence by 2035, passing reforms for strategic investments and green energy.

Ukraine has long been a global leader in metal (especially steel) production and exports. In 2021, it rose to 9th place in the World Steel ranking, exporting 15.2 million tons of steel. In 2020, the metal production industry employed one in 13 Ukrainians, contributed 12% to Ukraine's GDP, and brought $12.8 billion in exports to the treasury. Significant eastern and southeastern cities like Kryvyi Rih, Zaporizhzhia, and Mariupol are centers for metallurgical industries with five large companies: Metinvest, ArcelorMittal Kryvyi Rih, DCH, Interpipe, and Ferrexpo.

Ukrainian producers have successfully entered international markets, supporting the country's reputation for quality metal manufacturing. For instance, Metinvest steel is used in major global projects, including London's Shard, one of Europe's tallest buildings, and critical infrastructure like bridges and stadiums. Italian engineers handling the construction of the Chornobyl nuclear plant also selected Metinvest steel for the safety arch due to its exceptional quality.

Due to the Russian invasions of Ukraine in 2014 and 2022, the Ukrainian metal production took a considerable blow, suffering losses and much damage. Ukrainian producers had to shut down and cut exports due to the Russian occupation, destruction of facilities, blockade of seaports, lack of human resources, and other challenges. Metinvest lost its two factories, Ilyich Iron and Steel Works and Azovstal, in the occupied city of Mariupol, which used to produce 40% of Ukrainian steel. In 2024, Ukrainian enterprises stabilized and increased the production of cast iron, steel, and rolled products compared to the first year of the full-scale war.

The IT sector has been Ukraine's major industry since the 1990s with a reputation for high-quality software development, IT services, outsourcing, and tech innovation. Due to its robust education system and scientific base, Ukraine produces many skilled IT specialists, making it the fourth-largest supplier of tech talent. Cities like Kyiv, Lviv, and Kharkiv are tech hubs, housing over 20 clusters, over 5,000 outsourcing companies, and 300,000 developers. 

The Ukrainian IT sector expanded by over 20% and grew in value from around $110 million to $5.4 billion from 2003 to 2020, contributing 4% to Ukraine's GDP. In the same period, Ukraine saw the introduction of the digital state, the government app called Diia, designed to make 100% of public services available online and cut down on bureaucracy and corruption. The app has over 21.7 million users and provides access to 14 digital documents and 21 services.

Before 2022, the Ukrainian IT industry attracted, on average, $300-700 million in investments annually. When Russia unleashed its full-scale war, the IT market stood resilient, as most IT companies had prepared for the invasion by protecting their data, resources, and employees. In 2022, IT exports increased by 5.85%, bringing $7.3 billion in profit. This year, revenue is expected to reach $3.42 billion in 2024.

Ukraine has a well-developed chemical industry that produces fertilizers, synthetic fibers, pharmaceuticals, plastics, and various chemical products. This sector is one of the major ones for the Ukrainian economy, with over 6,896 chemical, petrochemical, and pharmaceutical companies employing 153,699 people. In 2021, the chemical sector earned about €11.8 billion, accounting for 5.9% of Ukraine's GDP.

Ukraine's chemical industry has large chemical plants in key industrial regions, such as Dnipro, Zaporizhzhia, Donetsk, Kyiv, Lviv, and more. The leading producers of chemical products are the OSTCHEM group, which includes the Cherkasy Azot, Horlivka Styrol, Sievierodonetsk Azot, and Rivneazot, producing 3% of nitrogen fertilizers globally. Ukraine is also home to several major pharmaceutical companies, such as Farmak and Darnitsa, which offer various medications and medical supplies. Enamine, Life Chemicals, and Otava Chemicals contributed over half of the world's chemical screening compounds stock — promising candidates for drug development.

Due to Russia's war, the Ukrainian chemical industry lost almost $600 million in profit and $2 billion in lost production capacity in 2022. Most enterprises have suspended production, especially in the zones of hostilities and occupied territories. According to the Cherkasy State Research Institute, at least seven large and medium-sized chemical enterprises were destroyed, and active chemical enterprises decreased by 16%. In the second year of the war, some companies in the safer Ukrainian regions, especially those close to the EU borders, resumed operations and continued making profits in 2023 and 2024.