The impact of the war on Ukraine's foreign trade

The article considers theoretical and practical aspects of the war's impact on Ukraine's foreign trade. The choice of the topic is due to the need to find new ways to minimize the negative impact of the war on the country's foreign trade. In the article, general scientific methods wer...

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Datum:	2024
1. Verfasser:	Simakhova, А.О.
Format:	Artikel
Sprache:	English
Veröffentlicht:	Інститут економіки промисловості НАН України 2024
Schriftenreihe:	Економіка промисловості
Schlagworte:	Макроекономічні та регіональні проблеми розвитку промисловості
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spelling	irk-123456789-1971372024-04-19T18:59:22Z The impact of the war on Ukraine's foreign trade Simakhova, А.О. Макроекономічні та регіональні проблеми розвитку промисловості The article considers theoretical and practical aspects of the war's impact on Ukraine's foreign trade. The choice of the topic is due to the need to find new ways to minimize the negative impact of the war on the country's foreign trade. In the article, general scientific methods were used: methods of synthesis and analysis; data systematization and comparison; and SWOT-analysis. The information base of this article consisted of statistical data of the State Statistics Service of Ukraine, articles by scientists, and Internet sources. The article analyses the changes in the structure of foreign trade in goods in Ukraine in 2022 compared to 2021. An analysis of changes in the regional structure of Ukraine's foreign trade is carried out. It was found that the exports of Vinnytsia, Volyn, Zakarpattia, Lviv, Odesa, Rivne, Ternopil, Cherkasy, and Chernivtsi regions in 2022 were higher than in 2021. These regions concentrated significant export potential during the war. The main destructive factors of Ukraine's foreign trade development during the war were identified. These factors are: decrease in export and import volumes; negative foreign trade balance; logistical problems, restrictions on the movement of goods, destruction of infrastructure. It is predicted that as a result of the war, the commodity structure of production in Ukraine will change, preference will be given to defense industries. Recommendations for the Ukrainian government to minimize the negative effects of the war on Ukraine's foreign trade are proposed, including: tax benefits for Ukrainian entrepreneurs, support for small and medium-sized enterprises, diversification of product sales markets, development of the domestic market and stimulation of domestic consumption, promotion of high-tech exports, reconstruction and restoration of the infrastructure of Ukraine, etc. The scientific novelty of the article lies in the improvement of ways to minimize the negative impact of the war on Ukraine's foreign trade. The practical value of the article lies in the development of relevant recommendations. It is established that the development of foreign trade in Ukraine will contribute to the stabilization of the national economy and ensure economic growth in the post-war period. Розглянуто теоретичні та практичні аспекти впливу війни на зовнішню торгівлю України. Вибір теми зумовлений необхідністю пошуку нових шляхів мінімізації цього впливу. Використано загальнонаукові методи синтезу та аналізу, систематизації та порівняння даних. Інформаційну базу статті становлять статистичні дані Державної служби статистики України, публікації науковців, інтернет-джерела. Проаналізовано зміни в структурі зовнішньої торгівлі України у 2022 р. порівняно з 2021 р., а також у регіональній структурі зовнішньої торгівлі України. Виявлено, що обсяг експорту Вінницької, Волинської, Закарпатської, Львівської, Одеської, Рівненської, Тернопільської, Черкаської та Чернівецької областей у 2022 р. був більшим, ніж у 2021 р. Саме в цих регіонах під час війни був сконцентрований значний експортний потенціал. Визначено основні деструктивні чинники розвитку зовнішньої торгівлі України під час війни: зменшення обсягів експорту та імпорту; від'ємне сальдо зовнішньої торгівлі; логістичні проблеми, обмеження на переміщення товарів, руйнування інфраструктури. Спрогнозовано, що внаслідок війни зміниться товарна структура виробництва в Україні, перевага надаватиметься оборонним галузям. Запропоновано рекомендації для уряду щодо мінімізації негативного впливу війни на зовнішню торгівлю України, серед яких: податкові пільги для вітчизняних підприємців, підтримка малого та середнього бізнесу, диверсифікація ринків збуту продукції, розвиток внутрішнього ринку та стимулювання внутрішнього споживання, сприяння високотехнологічному експорту, реконструкція та відновлення інфраструктури України тощо. Встановлено, що розвиток зовнішньої торгівлі в Україні сприятиме стабілізації національної економіки та забезпеченню економічного зростання в післявоєнний період. 2024 Article The impact of the war on Ukraine's foreign trade / А.О. Simakhova // Економіка промисловості. — 2024. — № 1 (105). — С. 5-16. — Бібліогр.: 14 назв. — англ. 1562-109Х DOI: http://doi.org/10.15407/econindustry2024.01.005 http://dspace.nbuv.gov.ua/handle/123456789/197137 338.245:339.56(477) en Економіка промисловості Інститут економіки промисловості НАН України
institution	Digital Library of Periodicals of National Academy of Sciences of Ukraine
collection	DSpace DC
language	English
topic	Макроекономічні та регіональні проблеми розвитку промисловості Макроекономічні та регіональні проблеми розвитку промисловості
spellingShingle	Макроекономічні та регіональні проблеми розвитку промисловості Макроекономічні та регіональні проблеми розвитку промисловості Simakhova, А.О. The impact of the war on Ukraine's foreign trade Економіка промисловості
description	The article considers theoretical and practical aspects of the war's impact on Ukraine's foreign trade. The choice of the topic is due to the need to find new ways to minimize the negative impact of the war on the country's foreign trade. In the article, general scientific methods were used: methods of synthesis and analysis; data systematization and comparison; and SWOT-analysis. The information base of this article consisted of statistical data of the State Statistics Service of Ukraine, articles by scientists, and Internet sources. The article analyses the changes in the structure of foreign trade in goods in Ukraine in 2022 compared to 2021. An analysis of changes in the regional structure of Ukraine's foreign trade is carried out. It was found that the exports of Vinnytsia, Volyn, Zakarpattia, Lviv, Odesa, Rivne, Ternopil, Cherkasy, and Chernivtsi regions in 2022 were higher than in 2021. These regions concentrated significant export potential during the war. The main destructive factors of Ukraine's foreign trade development during the war were identified. These factors are: decrease in export and import volumes; negative foreign trade balance; logistical problems, restrictions on the movement of goods, destruction of infrastructure. It is predicted that as a result of the war, the commodity structure of production in Ukraine will change, preference will be given to defense industries. Recommendations for the Ukrainian government to minimize the negative effects of the war on Ukraine's foreign trade are proposed, including: tax benefits for Ukrainian entrepreneurs, support for small and medium-sized enterprises, diversification of product sales markets, development of the domestic market and stimulation of domestic consumption, promotion of high-tech exports, reconstruction and restoration of the infrastructure of Ukraine, etc. The scientific novelty of the article lies in the improvement of ways to minimize the negative impact of the war on Ukraine's foreign trade. The practical value of the article lies in the development of relevant recommendations. It is established that the development of foreign trade in Ukraine will contribute to the stabilization of the national economy and ensure economic growth in the post-war period.
format	Article
author	Simakhova, А.О.
author_facet	Simakhova, А.О.
author_sort	Simakhova, А.О.
title	The impact of the war on Ukraine's foreign trade
title_short	The impact of the war on Ukraine's foreign trade
title_full	The impact of the war on Ukraine's foreign trade
title_fullStr	The impact of the war on Ukraine's foreign trade
title_full_unstemmed	The impact of the war on Ukraine's foreign trade
title_sort	impact of the war on ukraine's foreign trade
publisher	Інститут економіки промисловості НАН України
publishDate	2024
topic_facet	Макроекономічні та регіональні проблеми розвитку промисловості
url	http://dspace.nbuv.gov.ua/handle/123456789/197137
citation_txt	The impact of the war on Ukraine's foreign trade / А.О. Simakhova // Економіка промисловості. — 2024. — № 1 (105). — С. 5-16. — Бібліогр.: 14 назв. — англ.
series	Економіка промисловості
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fulltext	–––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 5 2024, № 1 (105) UDC 338.245:339.56(477) DOI: http://doi.org/10.15407/econindustry2024.01.005 Anastasiia O. Simakhova, Doctor of Economic Sciences, Professor National Aviation University 1 Liubomira Huzara av., Kyiv, 03058, Ukraine E-mail: anastasiia.simakhova@npp.nau.edu.ua https://orcid.org/0000-0001-7553-4531 THE IMPACT OF THE WAR ON UKRAINE'S FOREIGN TRADE The article considers theoretical and practical aspects of the war's impact on Ukraine's foreign trade. The choice of the topic is due to the need to find new ways to minimize the negative impact of the war on the country's foreign trade. In the article, general scientific methods were used: meth- ods of synthesis and analysis; data systematization and comparison; and SWOT-analysis. The in- formation base of this article consisted of statistical data of the State Statistics Service of Ukraine, articles by scientists, and Internet sources. The article analyses the changes in the structure of foreign trade in goods in Ukraine in 2022 compared to 2021. An analysis of changes in the regional structure of Ukraine's foreign trade is carried out. It was found that the exports of Vinnytsia, Volyn, Zakarpattia, Lviv, Odesa, Rivne, Ternopil, Cher- kasy, and Chernivtsi regions in 2022 were higher than in 2021. These regions concentrated signifi- cant export potential during the war. The main destructive factors of Ukraine's foreign trade development during the war were identified. These factors are: decrease in export and import volumes; negative foreign trade balance; logistical problems, restrictions on the movement of goods, destruction of infrastructure. It is pre- dicted that as a result of the war, the commodity structure of production in Ukraine will change, preference will be given to defense industries. Recommendations for the Ukrainian government to minimize the negative effects of the war on Ukraine's foreign trade are proposed, including: tax benefits for Ukrainian entrepreneurs, support for small and medium-sized enterprises, diversification of product sales markets, development of the domestic market and stimulation of domestic consumption, promotion of high-tech exports, reconstruction and restoration of the infrastructure of Ukraine, etc. The scientific novelty of the article lies in the improvement of ways to minimize the negative impact of the war on Ukraine's foreign trade. The practical value of the article lies in the development of relevant recommenda- tions. It is established that the development of foreign trade in Ukraine will contribute to the stabi- lization of the national economy and ensure economic growth in the post-war period. Keywords: exports, imports, goods, regions of Ukraine, industry. JEL: O24, P33 Russia's full-scale war against Ukraine, which began on February 24, 2022, had a neg- ative impact on all spheres, including foreign trade. Logistic chains were interrupted, ports and supply chains were blocked, infrastructure was destroyed, restrictions were placed on the movement of goods, security and resource is- sues arose (Simakhova, 2022). Thus, direct losses for Ukraine's economy from the war amounted to 135 billion US dollars, and the МАКРОЕКОНОМІЧНІ ТА РЕГІОНАЛЬНІ ПРОБЛЕМИ РОЗВИТКУ ПРОМИСЛОВОСТІ © Видавець ВД «Академперіодика» НАН України, 2024 Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 2024, № 1 (105) needs for reconstruction and restoration amo- unted to 411 billion US dollars (Погарська, 2023). The war in Ukraine had a negative im- pact not only on the domestic market, but also on the foreign market, as goods were not deliv- ered in the same volume as in previous years. Due to logistical problems, there have been changes in the transportation of goods, with a 55% decrease in the transportation of exports of goods by sea in 2022 and an increase in the transportation of exports of goods by rail (by 3.4%) and truck (by 32.4%) (Погарська, 2023). The problems of the impact of the war on the global economy and trade were studied by such scientists as M. Ruta (Ruta, 2022), Z. Darvas, C. Martins (Darvas, Martins, 2022), Y. Fang et al. (Fang, 2022), who highlighted the main factors and directions of the war's impact on trade and investment. At the regional level, the impact of the war in Ukraine was studied by N. Stukalo et al. (Stukalo, Steblianko, Simakhova, Doroshkevych, 2018), who em- phasised the main directions of the negative ef- fect of hostilities on European security and so- cio-economic development. In the article, I. Us, N. Havrylenko analysed operational data on the value and physical volumes, as well as the ge- ographical structure of this trade in the context of protracted military aggression and large-scale missile attacks by the Russian Federation on the entire territory of Ukraine, which are constantly continuing (Ус, Гавриленко, 2022). The war in Ukraine, through its impact on international trade, has a negative effect on food security and global food markets, as stated in the study by Ben Hassen and H. El Bilali (Ben Has- sen, Bilali, 2022). Scientists emphasize that if the war in Ukraine drags on, the food crisis will intensify, which will become a challenge for many countries, especially those that depend on food imports, such as the countries of the Mid- dle East and North Africa. The authors empha- size that the war in Ukraine started at an unfa- vorable time for global food markets, as food prices were already high due to supply chain dis- ruptions caused by the COVID-19 pandemic, high global demand and poor harvests in some countries (Ben Hassen, Bilali, 2022). The scholars of World Bank Group ana- lyzed the effect of the war in Ukraine for the –––––––––––––––––––––––––– Економіка промисловості 6 global trade and described the regional and global impact, global policy responses and sanctions on Russia (Guenette, Kenworthy, Wheeler, 2022). Thus, there are obviously many aspects to the impact of the war in Ukraine on the development of trade relations. Taking into account the relevance of this issue, the purpose of this article is to study the impact of the war on Ukraine's foreign trade. Analyzing the impact of the war on Ukraine's foreign trade can include various as- pects. First of all, it is worth making calcula- tions in the following areas: - changes in trade volumes, as well as analysis by trade groups to find out which prod- uct groups or sectors were most affected or, conversely, increased due to the war; - changes in prices and exchange rates; - changes in foreign trade partners; - loss of foreign trade volumes; - changes in the regional structure of for- eign trade; - to single out the main destructive fac- tors in the development of Ukraine's foreign trade in wartime conditions; - to assess the possibility of recovery and prospects for trade development in the future after the war. In this study, general scientific methods were used: methods of synthesis and analysis; data systematization and comparison. The study used the SWOT analysis method to iden- tify the threats of the war in Ukraine to foreign trade. The information base of this study con- sisted of statistical data of the State Statistics Service of Ukraine, articles by scientists, and Internet sources. According to the available statistical in- formation, the export of goods in Ukraine in 2022 amounted to 44.1 billion dollars, which is only 64.9% of the indicator of 2021. The im- port of goods in Ukraine in 2022 amounted to 55.3 billion dollars, which was only 75.9% of the 2021 level (State Statistics Service of Ukraine, 2022). Thus, the foreign trade balance in 2022 was negative. The commodity structure of Ukraine's foreign trade in 2022 also underwent signifi- cant changes compared to 2021 (Table 1). –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 7 2024, № 1 (105) Table 1 – Commodity Pattern of Foreign Trade of Ukraine in 2022 Commodity code and title by Ukrainian Classification of Commodities in Foreign Trade Exports Imports thsd. USD in % to 2021 % of the total volume thsd. USD in % to 2021 % of the total volume 1 2 3 4 5 6 7 Total 44148774.6 64.9 100.0 55273492.5 75.9 100.0 of which I. Live animals and livestock products 1472435.5 109.5 3.3 1174848.8 73.7 2.1 II. Plant products 13478480.9 86.7 30.5 1926622.1 90.4 3.5 III.15 Animal or plant fats and oils 5949360.7 84.5 13.5 293881.0 66.2 0.5 IV. Finished food industry pro- ducts 2496966.0 6.9 5.7 2554735.0 71.4 4.6 16 preparations from meat, fish 30841.0 106.8 0.1 142617.1 78.2 0.3 17 sugar and sugar confectionery 299610.7 121.5 0.7 70192.2 40.9 0.1 18 cocoa and cocoa preparations 147032.8 65.6 0.3 246432.9 55.8 0.4 19 preparations of grains 251824.6 60.7 0.6 246362.6 84.7 0.4 20 products of vegetables pro- cessing 222609.7 111.0 0.5 214903.8 82.1 0.4 21 other mixed foodstuffs 119729.7 675 0.3 415140.3 74.0 0.8 22 alcoholic and non-alcoholic beverages. vinegar 204708.1 65.9 0.5 489771.2 68.1 0.9 23 remains and wastes of food industry 1081952.8 62.4 2.5 362018.5 104.4 0.7 24 tobacco and industrial substi- tutes of tobacco 138656.6 30.6 0.3 367296.4 61.0 0.7 V. Mineral products 4323469.3 51.4 9.8 13112098.6 87.6 23.7 25 salt, sulphur, soil and stones 202740.9 39.7 0.5 224579.7 83.4 0.4 26 ores, slags, ashes 3080548.5 43.3 7.0 87166.8 23.6 0.2 27 mineral fuel, petroleum and petroleum distillation products 1040179.9 132.6 2.4 12800352.1 89.3 23.2 VI. Products of chemical and al- lied industries 1287184.2 45.7 2.9 6302747.3 64.7 11.4 VII. Polymeric materials, plas- tics and articles of them 470206.4 42.6 1.1 3247150.3 67.4 5.9 VIII. Raw leather and curry leather 104482.9 63.1 0.2 240494.2 80.1 0.4 IX. Wood and articles of wood 1885422.0 94.0 4.3 197576.6 44.7 0.4 X. Paper bulk from wood or other vegetable fibres 277514.1 52.0 0.6 760245.1 68.3 1.4 ХI. Textiles materials and arti- cles of textiles 671545.0 77.6 1.5 2482989.1 93.3 4.5 XII. Footwear, hats umbrellas 175073.2 92.2 0.4 570744.7 99.0 1.0 XIII. Products from stone, gyps, cement 300657.0 52.9 0.7 659019.0 69.8 1.2 –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– 8 ISSN 1562-109X Econ. promisl. 2024, № 1 (105) Ending of table 1 1 2 3 4 5 6 7 XIV. 71 Natural or cultured pearls, precious stones, metals and preparations thereof 40989.1 31.9 0.1 70187.8 32.0 0.1 XV. Base metals and prepara- tions thereof 6004098.5 37.5 13.6 2590689.1 59.2 4.7 ХVІ. Machines, equipment and mechanisms, electric and tech- nical equipment 3735990.3 71.0 8.5 9181622.5 64.6 16.6 ХVІІІ. Optical, cinematographic apparatus 121538.2 71.1 0.3 1172074.3 77.1 2.1 XX Different industrial products 972465.3 77.8 2.2 713212.8 53.1 1.3 ХХI. 97 Art articles 1113.3 41.7 0.0 478.3 7.3 0.0 Source: (State Statistics Service of Ukraine, 2022). Statistical information is given in table. 1 shows that in 2022 the volume of the follow- ing goods increased in the export of Ukraine compared to 2021: Live animals and livestock products (109.5% to the level of 2021), prepa- rations from meat, fish (106.8 %), sugar and sugar confectionery (121.5%), products of veg- etable processing (111%), mineral fuel, petro- leum and petroleum distillation products (132.6%). These are agricultural products and mineral resources. For all other types of goods, Ukrainian exports fluctuated at the level of 30- 60% of the level of 2021, that is, the world mar- ket did not receive these goods from Ukraine. Regarding imports, in 2022, for all types of goods, except for remains and wastes of food industry, the level of imports in Ukraine was lower than in 2021. Exports of the following goods de- creased the most in 2022: ferrous metals - by USD 9.4 billion (by 67.5% compared to 2021); ores, slag and ash - by USD 4 billion (by 57.6% compared to 2021); and grain crops - by USD 3.2 billion (by 26.2% compared to 2021) (Харахурсах, 2022). Certain changes in foreign trade in ser- vices also occurred in Ukraine during 2022 (Table 2). Table 2 – Structure of foreign trade by types services in 2022 According to Classification of External Economic Services Exports Imports Balance thsd. USD in % of 2021 in % of the total volume thsd. USD in % of 2021 in % of the total volume 1 2 3 4 5 6 7 8 Total 9166030 71,7 100 3015093 37,8 100 6150937 of which Services for the processing of material resources 921943,8 59,9 10,1 4228,1 42,3 0,1 917715,7 Services for the processing of goods in the domestic economy 1609,3 24,7 0,2 1181,6 170,7 28 427,7 Services for the processing of goods abroad 920334,5 60,1 99,8 3046,5 32,8 72,1 917288 Services for repair and technical maintenance not related to other categories 129879 42,9 1,4 47042,9 61,4 1,6 82836,1 –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 9 2024, № 1 (105) Continuation of table 2 1 2 3 4 5 6 7 8 Transport services 2963197 63,6 32,3 1040300 58,5 34,5 1922897 Sea transport services 256081,2 41,5 8,6 416961,6 69,8 40,1 -160880 River transport services 48438,8 133 1,6 - - - - Air transport services 374149,2 35,8 12,6 171404,2 30,2 16,5 202744,9 Rail transport services 145433,9 31,5 4,9 116790,9 43,2 11,2 28643 Motor transport services 406670,3 98,4 13,7 223767,9 94,6 21,5 182902,4 Other auxiliary and addi- tional transport services 202608 57,7 6,8 82365,9 169,9 7,9 120242,2 Services connected with travels 146248,6 42,6 1,6 188331,9 11,8 6,3 -42083,3 Services for construction 26247,4 44,7 0,3 17871,9 26,5 0,6 8375,5 Services for construction abroad 22242 46,4 84,7 7991,2 19,4 44,7 14250,8 Services for construction in domestic economy 4005,4 37,1 15,3 9880,7 37,8 55,3 -5875,3 Services for insurance 22727,3 18,3 0,3 68923,8 50,5 2,3 -46196,5 Services connected with fi- nancial activity 162411,1 176,7 1,8 366659,3 71,7 12,2 -204248 Royalties and other ser- vices connected with usage of intellectual property 31681,5 51,3 0,4 292952,8 46,8 9,7 -261271 Franchise services and trademark use 4071 44,9 12,9 113365,1 48,9 38,7 -109294 Licensing services 19044,3 47 60,1 137700,1 47,3 47 -118656 Services for patent activi- ties 1355,8 35,3 4,3 236,8 32 0,1 1119 Other royalties 7210,3 86,6 22,8 41650,9 41 14,2 -34440,6 Services in the sphere of telecommunications, computer and information services 3712947 92,1 40,5 414222,2 58,1 13,7 3298725 Telecommunications services 124207,7 121,7 3,4 91177,2 85 22 33030,6 Computer services 2751703 87 74,1 239966,2 59,8 57,9 2511737 Information services 837036,6 109 22,5 83078,8 40,6 20,1 753957,8 Business services 1026021 68,2 11,2 537301,2 47 17,8 488720,1 R&D services 98222,5 63,6 9,6 23273,2 64,3 4,3 74949,3 Professional and consul- ting services 540703,7 70,6 52,7 378035,8 58,6 70,4 162668 Scientific and technical services 212095,1 64,3 20,7 48070,9 36,5 9 164024,2 Services for treatment and depollution - - - 21,9 13,4 0 -21,9 Agriculture and mining services 1975,5 50,1 0,2 1778,9 32,6 0,3 196,6 –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– 10 ISSN 1562-109X Econ. promisl. 2024, № 1 (105) Ending of table 2 1 2 3 4 5 6 7 8 Services for operational leasing 25839,3 52,1 2,5 49356,8 21,5 9,2 -23517,5 Services related to trade and intermediary services 31569,1 60,6 3,1 12852,1 52,4 2,4 18717 Other business services 115616,3 78,5 11,3 23911,9 33,9 4,5 91704,4 Services rendered to indi- vidual persons, cultural and recreation services 21487,4 43,6 0,2 17257,6 79,1 0,6 4229,8 Audio-visual and related services 11471,7 60,2 53,4 12256,9 77,5 71 -785,2 Cultural and recreational services 1663,3 84,2 7,7 3476,2 128,9 20,1 -1812,9 Other individual services 8352,4 29,6 38,9 1524,5 46,3 8,8 6827,9 State and government ser- vices 1238,6 13,3 0 20000,9 1,8 0,7 -18762,4 Source: (State Statistics Service of Ukraine, 2022). Ukraine's foreign trade in services in 2022 declined significantly compared to 2021, but the trade balance was positive. According to Table 2, exports of services decreased by 29.3% compared to 2021, while imports de- creased by 62.2%. As for exports of services, public and governmental services and insur- ance services decreased the most in 2022 com- pared to 2021. However, exports of the follow- ing services increased significantly in 2022: fi- nancial services (by 76.7%), river transport ser- vices (by 33%), telecommunications services (by 21.7%), and information services (by 9%). As for the structure of imports of ser- vices, in 2022, imports of such services as pub- lic and government services, travel services, and services for treatment and deportation de- creased significantly. In 2022, the following services increased significantly in imports: Ser- vices for the processing of goods in the domes- tic economy (by 70.7%), other support and transportation services (by 69.9%), cultural and recreational services (by 28.9%). Such changes in foreign trade in services are related to changes in the transportation of goods abroad and domestic restrictions on the processing of resources due to the war in Ukraine. In the regional structure of foreign trade of Ukraine, Kyiv, Volyn, Lviv regions and the city of Kyiv had the largest negative foreign trade balance, which imported more than they exported (Table 3). The vast majority of regions of Ukraine had a positive foreign trade balance. Moreover, the export of Vinny- tsia, Volyn, Zakarpattia, Lviv, Odesa, Rivne, Ternopil, Cherkasy, and Chernivtsi regions in 2022 was greater than in 2021. This is due to the fact that these regions are mainly border re- gions and therefore carried out more active ex- port activity. Imports in 2022 were higher than in 2021 in the Volyn, Zhytomyr, Lviv, Khmel- nytskyi, and Chernivtsi regions (Table 3). Poland (more than 5.6 billion dollars or 15.4%), Romania (8.2%), and Turkey (6.6%) became the leading countries in Ukrainian ex- ports in 2022. China dropped from the first step in 2021 immediately to the fourth (5.3% of Ukraine's total exports) (State Customs Service of Ukraine, 2022). China (15%), Poland (9.9%), Germany (8.3%) became the leading countries in terms of imports to Ukraine in 2022 (State Customs Service of Ukraine, 2022). In general, in the regional context, ex- ports of goods from Ukraine to the CIS coun- tries decreased by 2.9 times, to Africa by 2.6 times, to Asia by 2.3 times, but increased by 4.8% to Europe (Погарська, 2023). It is obvi- ous that as a result of the war, Ukraine has re- oriented itself towards its Western partners, who are supporting it in this difficult time, as well as problems with the transportation of goods over long distances. –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 11 2024, № 1 (105) Table 3 – Regional volumes of foreign trade in Goods in 2022 Exports Imports Balance thsd. USD in % to 2021 % of the total volu- me thsd. USD in % to 2021 % of the total volu- me Ukraine 44148774.6 64.9 100.0 55273492.5 75.9 100.0 -11124717.9 of which Vinnytsya 1601459.6 122.3 3.6 622548.2 89.1 1.1 978911.4 Volyn 1066621.4 128.1 2.4 2032337.8 112.0 3.7 -965716.4 Dnipropetrovsk 6250731.5 51.4 14.2 3948305.9 67.2 7.1 2302425.6 Donetsk 284077.6 4.0 0.6 139077.3 7.4 0.3 145000.3 Zhytomyr 718104.3 93.1 1.6 1205918.2 175.0 2.2 -487813.9 Zakarpattya 1970465.4 117.0 4.5 1645390.6 97.0 3.0 325074.8 Zaporizhzhya 2808726.3 59.2 6.4 1195329.3 58.4 2.2 1613397.0 Ivano–Frankivsk 684595.4 58.8 1.6 597917.0 60.1 1.1 86678.4 Kyiv 2098829.7 82.3 4.8 3620712.1 64.7 6.6 -1521882.4 Kirovohrad 873374.2 85.5 2.0 249461.6 85.3 0.5 623912.6 Luhansk 8704.4 5.2 0.0 12316.8 4.7 0.0 -3612.4 Lviv 3025192.9 103.2 6.9 5387862.1 113.3 9.7 -2362669.2 Mykolayiv 1643333.9 47.5 3.7 733328.5 61.4 1.3 910005.4 Odesa 2400406.4 141.4 5.4 2121488.8 91.8 3.8 278917.6 Poltava 1866989.1 58.5 4.2 1201028.2 63.9 2.2 665960.9 Rivne 744198.0 105.7 1.7 550203.5 95.4 1.0 193994.5 Sumy 723998.6 68.2 1.6 582510.9 67.9 1.1 141487.7 Ternopil 780476.4 115.0 1.8 518197.6 97.7 0.9 262278.8 Kharkiv 880120.7 48.9 2.0 1251005.0 52.1 2.3 -370884.3 Kherson 56990.5 13.8 0.1 36982.8 13.8 0.1 20007.7 Khmelnytskiy 780233.2 85.0 1.8 707660.5 112.6 1.3 72572.7 Cherkasy 1295560.3 146.5 2.9 606709.6 57.6 1.1 688850.7 Chernivtsi 286688.7 138.3 0.6 486152.0 249.9 0.9 -199463.3 Chernihiv 717543.8 60.3 1.6 300378.9 62.1 0.5 417164.9 Kyiv city 10467803.9 68.3 23.7 22003142.0 70.9 39.8 -11535338.1 Source: (State Statistics Service of Ukraine, 2022). Despite the full-scale war and eco- nomic losses, inflation was 20.2% due to a set of anti-crisis measures taken by the Ukrainian government and the National Bank of Ukraine, as well as actions taken by international insti- tutions to support Ukraine's economy. Fixing the hryvnia exchange rate was important in keeping inflation under control. Maintaining the exchange rate stability not only directly re- strained the growth of inflation, the cost of goods and services (Погарська, 2023). According to the Table 4 the main de- structive factors of Ukraine's foreign trade in 2022 were: decrease in export and import vol- umes; negative foreign trade balance; logistical problems, restrictions on the movement of goods, destruction of infrastructure. As a result of the war, the commodity structure of produc- tion in Ukraine will change; preference will be given to defense industries. The war also af- fects the environment, which is also affected by other man-made factors (Popov, Iatsyshyn, Ko- vach, Artemchuk, Kameneva, Radchenko, Ni- kolaiev, 2021), which has a negative impact on the quality of agricultural products. –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– 12 ISSN 1562-109X Econ. promisl. 2024, № 1 (105) Table 4 – SWOT-analysis of the war impact on Ukrainian foreign trade Strengths Weaknesses 1. Growth in the transportation of exports by rail (by 3.4%) and truck (by 32.4%). 2. Positive trade balance in services in 2022. 3. Exports of the following services increased signifi- cantly in 2022: financial services (by 76.7%), river transport services (by 33%), telecommunications ser- vices (by 21.7%), and information services (by 9%). 4. Growth in exports of goods to European countries (by 4.8%). 1. Reduction in the transportation of goods by sea (by 55% in 2022). 2. The export of goods to Ukraine in 2022 amounted to only 64.9% of the indicator of 2021. The import of goods to Ukraine in 2022 amounted to only 75.9% of the 2021 level. 3. Decrease in exports of goods in 2022: ferrous metals (by 67.5% by 2021); ores, slag and ash (by 57.6% by 2021); cereals (by 26.2% by 2021). Opportunities Threats 1. Increased exports of agricultural products. In 2022, exports of live animals and livestock products increased (109.5% compared to the level of 2021), preparations from meat, fish (106.8%), sugar and sugar confection- ery (121.5%), and vegetable processing products (111%). 2. Prospects for the development of transport and tour- ism services (in 2022, imports of the following services increased: other support and transportation services (by 69.9%), cultural and recreational services (by 28.9%). 3. Formation of regional centers of foreign trade (the exports of Vinnytsia, Volyn, Zakarpattia, Lviv, Odesa, Rivne, Ternopil, Cherkasy, and Chernivtsi regions in 2022 were higher than in 2021. Imports in 2022 were higher than in 2021 in the Volyn, Zhytomyr, Lviv, Khmelnytskyi, and Chernivtsi regions). 1. New losses from the war for Ukraine's economy (currently amounting to 135 billion US dollars). 2. Negative foreign trade balance. 3. Exports and imports of services, public and governmental services, travel services, and insurance ser- vices decreased the most in 2022 compared to 2021. 4. Decrease in exports of goods to Asia (by 2.3 times) and Africa (by 2.6 times). 5. Rising inflation (in 2022, inflation was 20.2%). Source: summarized by the author according to Tables 1-3. The WTO noted that the war in Ukraine had a negative impact on the world food market and increased food prices (WTO, 2022). Conclusions. Thus, we can conclude that the war had a significant negative impact on Ukraine's foreign trade. In addition, the war also affects the food security of countries that depend on Ukraine's agricultural products. The scientific novelty of the article lies in the im- provement of ways to minimize the negative impact of the war on Ukraine's foreign trade. The practical value of the article lies in the de- velopment of recommendations to minimise the outlined negative consequences of the war in Ukraine. For this purpose, the Government of Ukraine, in particular the Ministry of Economy and the Ministry of Strategic Indus- tries of Ukraine, is suggested to take the fol- lowing steps: 1. Tax benefits for Ukrainian entrepre- neurs, as well as support for small and medium- sized enterprises. 2. Diversification of product sales mar- kets. This is necessary to reduce dependence on certain countries and markets in certain circum- stances. 3. Development of the domestic market and stimulation of domestic consumption. 4. Diversification of production indus- tries. 5. Promoting the export of high-tech goods. The production and export of high-tech –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 13 2024, № 1 (105) goods, such as software, aviation and space products, and other innovative products, will further strengthen Ukraine's position in foreign markets. An important aspect of the develop- ment of foreign trade in Ukraine is a well-de- veloped infrastructure, so the government, to- gether with local authorities, needs to recon- struct and restore the infrastructure of Ukraine in those areas affected by hostilities and enemy attacks. The outlined directions will have a posi- tive impact on Ukraine's foreign trade and the stabilisation and strengthening of the national economy in the post-war period. Literature Погарська О. (2023). Економіка України в умовах війни. Національний банк Украї- ни. URL: https://bank.gov.ua/admin_up loads/article/Poharska_pr_01-02.06.2023. pdf? v=4 Ус І., Гавриленко Н. (2022). Вплив війни на зовнішню торгівлю України (за підсум- ками першого півріччя 2022 р.). URL: https://niss.gov.ua/sites/default/files/2022- 08/_us-gavrilenko-tablici_merged_0.pdf Харахурсах М. (2023). Як війна вплинула на зовнішню торгівлю України. Підсумки 2022 року. URL: https://thepage.ua/ua/ news/pidsumki-2022-roku-yak-vijna-vpli nula-na-zovnishnyu-torgivlyu-ukrayini Ben Hassen T., Bilali. H. El. (2022). Impacts of the Russia-Ukraine War on Global Food Se- curity: Towards More Sustainable and Re- silient Food Systems? Food. № 11 (15). Р. 2301. URL: https://doi.org/10.3390/ foods11152301 Darvas Z., Martins C. (2022). The impact of the Ukraine crisis on international trade, Work- ing Paper 20/2022, Bruegel. Fang Y. et al. (2022). The Russia-Ukraine con- flict and volatility risk of commodity mar- kets. Finance Res. Lett. Guenette J. D., Kenworthy P. G., Wheeler C. M. (2022). Implications of the War in Ukraine for the Global Economy. URL: https://the- docs.worldbank.org/en/doc/5d903e848db1 d1b83e0ec8f744e55570-0350012021/rela ted/Implications-of-the-War-in-Ukraine-for- the-Global-Economy.pdf Popov O., Iatsyshyn A., Kovach V., Artem- chuk V., Kameneva I., Radchenko O., Niko- laiev K. et al. (2021). Effect of power plant ash and slag disposal on the environment and population health in Ukraine. Journal of Health Pollution, № 11 (31), Art. 210910. DOI: https://doi.org/10.5696/2156-9614- 11.31.210910 Ruta M. (ed.) (2022). The Impact of the War in Ukraine on Global Trade and Investment. Washington, DC. URL: http://hdl.handle. net/10986/37359. License: CC BY 3.0 IGO Simakhova A. (2022). Post-War Socialization of the Economy: Ukrainian and European Security. Proceedings of 3rd International Conference CNDGS’2022. Р. 71-75. DOI: https://doi.org/10.47459/cndcgs.2022.9 State Customs Service of Ukraine (2023). Statistics. URL: https://customs.gov.ua/en/ statistika-ta-reiestri State Statistics Service of Ukraine (2022). Commodity and Service Pattern of Foreign Trade of Ukraine. URL: https://ukrstat.gov. ua/operativ/operativ2022/zd/tsztt/arh_tsztt2 022_u.html. Stukalo N., Steblianko I., Simakhova A., Doro- shkevych V. (2018). Trends in economic and social security at national and European level: interrelationships, threats and oppor- tunities, Journal Security and Sustainability Issues. № 8 (2). Р. 99-208. DOI: https://doi.org/10.9770/jssi.2018.8.2(7) WTO (2022). WTO Secretariat note exami- nes impact of the crisis in Ukraine on global trade and development. URL: https://www.wto.jorg/english/news_e/news 22_e/devel_08apr22_e.htm References Pogarska, O. (2023). Economy of Ukraine in the conditions of war. National Bank of Ukraine. Retrieved from https://bank.gov. ua/admin_uploads/article/Poharska_pr_01- 02.06.2023.pdf? v=4 [in Ukrainian]. Kharakhursakh, M. (2023). How the war af- fected Ukraine's foreign trade. Results of 2022. Retrieved from https://thepage.ua/ https://www.sciencedirect.com/science/article/pii/S154461232200455X https://www.sciencedirect.com/science/article/pii/S154461232200455X –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– 14 ISSN 1562-109X Econ. promisl. 2024, № 1 (105) ua/news/pidsumki-2022-roku-yak-vijna- vplinula-na-zovnishnyu-torgivlyu-ukrayini [in Ukrainian]. Us, I., & Havrylenko, N. (2022). The impact of the war on Ukraine's foreign trade (based on the results of the first half of 2022). Re- trieved from https://niss.gov.ua/sites/defa ult/files/2022-08/_us-gavrilenko-tablici_mer ged_0.pdf [in Ukrainian]. Ben Hassen, T., & Bilali, H. El. (2022). Im- pacts of the Russia-Ukraine War on Global Food Security: Towards More Sustainable and Resilient Food Systems? Food, 11 (15), 2301. DOI: https://doi.org/10.3390/foods 11152301 Darvas, Z., & Martins, C. (2022). The impact of the Ukraine crisis on international trade, Working Paper 20/2022, Bruegel. Fang,Y. et al. (2022). The Russia-Ukraine con- flict and volatility risk of commodity mar- kets. Finance Res. Lett. Guenette, J.D., Kenworthy, P.G., & Wheeler, C.M. (2022). Implications of the War in Ukraine for the Global Economy. Retrieved from https://thedocs.worldbank.org/en/doc/5d90 3e848db1d1b83e0ec8f744e55570-035001 2021/related/Implications-of-the-War-in- Ukraine-for-the-Global-Economy.pdf Popov, O., Iatsyshyn, A., Kovach, V., Artem- chuk, V., Kameneva, I., Radchenko, O., Ni- kolaiev, K. et al. (2021). Effect of power plant ash and slag disposal on the envi- ronment and population health in Ukraine. Journal of Health Pollution, 11 (31), 210910. DOI: https://doi.org/10.5696/2156- 9614-11.31.210910 Ruta, M. (ed.) (2022). The Impact of the War in Ukraine on Global Trade and Invest- ment. Washington, DC. Retrieved from http://hdl.handle.net/10986/37359. License: CC BY 3.0 IGO Simakhova, A. (2022). Post-War Socialization of the Economy: Ukrainian and European Security. Proceedings of 3rd International Conference CNDGS’2022. pp. 71-75. DOI: https://doi.org/10.47459/cndcgs.2022.9 State Customs Service of Ukraine (2022). Sta- tistics. Retrieved from https://customs.gov. ua/en/statistika-ta-reiestri State Statistics Service of Ukraine (2022). Commodity and Service Pattern of Fore- ign Trade of Ukraine. Retrieved from https://ukrstat.gov.ua/operativ/operativ202 2/zd/tsztt/arh_tsztt2022_u.html Stukalo, N., Steblianko, I., Simakhova, A., & Doroshkevych, V. (2018). Trends in econo- mic and social security at national and Eu- ropean level: interrelationships, threats and opportunities, Journal Security and Sustain- ability Issues, 8(2), pp. 199-208. DOI: https://doi.org/10.9770/jssi.2018.8.2(7) WTO (2022). WTO Secretariat note examines impact of the crisis in Ukraine on global trade and development. Retrieved from https://www.wto.org/english/news_e/news 22_e/devel_08apr22_e.htm Анастасія Олексіївна Сімахова, доктор екон. наук, професор Національний авіаційний університет пр. Любомира Гузара, 1, м. Київ, 03058, Україна E-mail: anastasiia.simakhova@npp.nau.edu.ua https://orcid.org/0000-0001-7553-4531 ВПЛИВ ВІЙНИ НА ЗОВНІШНЮ ТОРГІВЛЮ УКРАЇНИ Розглянуто теоретичні та практичні аспекти впливу війни на зовнішню торгівлю Укра- їни. Вибір теми зумовлений необхідністю пошуку нових шляхів мінімізації цього впливу. Використано загальнонаукові методи синтезу та аналізу, систематизації та порівняння да- них. Інформаційну базу статті становлять статистичні дані Державної служби статистики України, публікації науковців, інтернет-джерела. Проаналізовано зміни в структурі зовнішньої торгівлі України у 2022 р. порівняно з 2021 р., а також у регіональній структурі зовнішньої торгівлі України. Виявлено, що обсяг https://www.sciencedirect.com/science/article/pii/S154461232200455X https://www.sciencedirect.com/science/article/pii/S154461232200455X https://www.sciencedirect.com/science/article/pii/S154461232200455X –––––––––––––––––––––––––– Економіка промисловості Economy of Industry –––––––––––––––––––––––––––––– ISSN 1562-109X Econ. promisl. 15 2024, № 1 (105) експорту Вінницької, Волинської, Закарпатської, Львівської, Одеської, Рівненської, Терно- пільської, Черкаської та Чернівецької областей у 2022 р. був більшим, ніж у 2021 р. Саме в цих регіонах під час війни був сконцентрований значний експортний потенціал. Визначено основні деструктивні чинники розвитку зовнішньої торгівлі України під час війни: зменшення обсягів експорту та імпорту; від'ємне сальдо зовнішньої торгівлі; логісти- чні проблеми, обмеження на переміщення товарів, руйнування інфраструктури. Спрогнозо- вано, що внаслідок війни зміниться товарна структура виробництва в Україні, перевага на- даватиметься оборонним галузям. Запропоновано рекомендації для уряду щодо мінімізації негативного впливу війни на зовнішню торгівлю України, серед яких: податкові пільги для вітчизняних підприємців, під- тримка малого та середнього бізнесу, диверсифікація ринків збуту продукції, розвиток вну- трішнього ринку та стимулювання внутрішнього споживання, сприяння високотехнологіч- ному експорту, реконструкція та відновлення інфраструктури України тощо. Встановлено, що розвиток зовнішньої торгівлі в Україні сприятиме стабілізації націо- нальної економіки та забезпеченню економічного зростання в післявоєнний період. Ключові слова: експорт, імпорт, товари, регіони України, промисловість. JEL: O24, P33 Формат цитування: Simakhova A. O. (2024). The impact of the war on Ukraine's foreign trade. Економіка про- мисловості. № 1 (105). С. 5-15. DOI: http://doi.org/10.15407/econindustry2024.01.005 Simakhova, A. O. (2024). The impact of the war on Ukraine's foreign trade. Econ. promisl., 1 (105), рр. 5-15. DOI: http://doi.org/10.15407/econindustry2024.01.005 Надійшла до редакції 03.10.2023 р.

The impact of the war on Ukraine's foreign trade

Institution

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