What awaits Ukraine in 2025: dollar exchange rate, food prices, elections and defense plans
1 January 10:27
In 2025, Ukraine will face new economic, energy, and security challenges. How are farmers adapting to climate change and military realities? Will the energy system be able to overcome the consequences of destruction and shortages? What strategic steps does Ukraine plan to take to de-occupy Crimea and strengthen its defense capabilities? Analysis of key development scenarios, experts’ forecasts and prospects that will determine the future of the country – more in the
Energy sector: restoration of destroyed thermal power plants and prices for consumers
Starting January 1, 2025, the tariff for natural gas transportation will increase from UAH 124.16 to UAH 501.97 per 1000 cubic meters, an increase of almost 305%. The main reason for the significant increase is the termination of Russian gas transit through Ukraine. Dmytro Lippa, CEO of the Ukrainian GTS Operator, noted that in 2024, 85% of the company’s revenues came from gas transportation from Russia, while domestic consumers accounted for only 15% of revenues.
Lippa explained that although this increase will not fully compensate for the losses, it is necessary to take into account the needs of the Ukrainian economy, which requires balanced solutions.
During the NEURC meeting , business representatives warned that such a significant tariff increase would be an additional financial burden for industrial enterprises. This decision could have a significant impact on the economy as businesses will have to adapt to the new conditions.
Ukraine continues to rebuild its energy infrastructure after significant damage. Energy expert Serhiy Dyachenko notes that only 20% of thermal generation remains in working order, and the construction of new thermal power plants requires billions of dollars in investment.
“The main thing now is to repair distribution networks and substations, use mobile generating capacities, and increase electricity imports from the EU. It is also important to develop alternative energy, in particular wind generation,” emphasized Dyachenko.
According to Stanislav Ignatiev, PhD, Executive Director of the Institute for Sustainable Development and Chairman of the Board of the Ukrainian Renewable Energy Association, the Ukrainian energy system has suffered significant losses. In an exclusive commentary for
Scenario 1 – Lack of investment and electricity shortages. In this scenario, if investors’ confidence in the energy sector is not restored, and if the shelling of energy facilities does not stop, Ukraine will face an electricity shortage for the next 5-7 years. Ignatiev emphasizes that this deficit cannot be covered by imports. Therefore, Ukrainians are likely to have to get used to long schedules of hourly blackouts and the reality of a “country of generators.”
“The outage schedules will continue, and the power system will be very vulnerable, with a great risk to the country’s energy security,” Ignatiev explains.
Scenario 2 – Optimistic development with investment. This scenario assumes that investors will return to the energy sector, which will allow restoring some of the destroyed capacities. It is already planned to build up to 800 MW of wind power plants, as well as to develop rooftop solar power plants (SPPs) with a capacity of up to 0.5 GW. In addition, investments will be made in gas-powered generation to cover the enterprises’ own needs.
Scenario 3 – Continued massive attacks on energy facilities. If the attacks on energy infrastructure continue, especially on Ukrenergo’s substations, the situation with the electricity shortage could deteriorate significantly. According to Ignatiev, if substations are severely damaged, the power system may “disintegrate” into regional “energy islands.” This will mean that some regions will be able to cover only their minimum energy needs, which will lead to long power outages.
Economy: hryvnia, dollar and inflation rates
Ilya Neskhodovskyi, Head of the Analytical Department of the Network for the Protection of National Interests of the ANTS, exclusively for
Ilya Neskhodovsky notes that high inflation in Ukraine in 2024 is the result of three main factors:
- Rising electricity costs: In line with the increase in tariffs, prices for energy-dependent goods have risen.
- Unfavorable weather conditions: A dry summer resulted in lower crop yields, which affected food prices.
- National currency devaluation: The hryvnia depreciated by 14% over the year, which also contributed to higher prices for imported goods.
“The dollar is now worth about 42 UAH, which is the result of a significant trade deficit and periodic delays in international aid,” said Neskhodovsky.
Meanwhile, Oleg Getman, coordinator of the Economic Expert Platform, spoke to journalists
“We expect the exchange rate to be at UAH 44 by the end of the year. It will be a slow devaluation due to the large trade deficit that needs to be corrected,” he adds.
According to the expert, an important task for the National Bank will be to support exporters and reduce imports. At the same time, Mr. Hetman emphasizes that the situation at the frontline may have unpredictable consequences for the economy. “The only factor that can significantly affect the economic situation is the frontline. A war of attrition or a change in circumstances in the international arena.
Food prices in 2025
Food prices in 2025 will depend on a number of economic factors, including the hryvnia exchange rate, tax levels, energy prices, and the purchasing power of the population. This was stated by economic expert Andriy Novak.
“Food prices are highly dependent on the hryvnia exchange rate, especially when it comes to imports. But this affects not only finished products. Almost all equipment used by agricultural and processing companies is imported. If the hryvnia devalues, the cost of imported equipment and its maintenance will increase, which will raise the cost of production,” Novak said.
According to the expert, tax changes will also be important. The decline in the purchasing power of the population may limit the ability of producers and traders to raise prices due to the risk of losing demand.
“The food market in Ukraine remains one of the most competitive. The large number of producers and traders creates mutual control over prices. This prevents monopolists from significantly raising the cost of goods,” emphasized Novak.
Prices will also be affected by energy resources, which form the cost of production. Together, all these factors will determine the price dynamics in 2025.
Although forecasting in such conditions is difficult, high competition and balancing supply and demand can help avoid sharp jumps in the cost of products.
What awaits the front and the Armed Forces in 2025
Military expert Roman Svitan said in an exclusive commentary for
“2025 will be the year of either the beginning or the end of the Crimean operation. The de-occupation will begin with missile and air strikes on 150 stationary military facilities in Crimea. Our task is to destroy military facilities on the peninsula to deprive Russia of the ability to supply Crimea militarily. Next is a ground operation that will depend on the available forces and means,” Roman Svitan
There is also a scenario in which Ukrainian troops may not even enter Crimea, but only destroy military facilities with missiles and drones, adds Roman Svitan.
The liberation of Crimea will be a turning point, the expert believes. After all, once the peninsula is liberated or Russian troops are destroyed, Russia will realize that it is impossible to hold Crimea militarily. This will force them to pull back from Ukraine, Svitan predicts.
At the same time, economic pressure will play a decisive role in the collapse of the Russian regime. Sanctions against Russia should be strengthened. This will create conditions under which the Russian economy will not be able to support military operations by 2026, summarizes Roman Svitan.
Defense sector-2025
In a speech to the Verkhovna Rada, President Volodymyr Zelenskyy announced ambitious goals for defense production. In 2025, Ukraine plans to produce at least 30,000 long-range drones and 3,000 missiles, including modernized versions of the Neptune missile.
According to the President, more than 2.5 million mortar rounds and artillery shells of 60 mm to 155 mm caliber have already been produced. This volume will be increased, as well as the production of various types of drones.
“Our soldiers are already using Ukrainian drones to shoot down Russian reconnaissance vehicles and to fight the Shahed. We are working to increase the production of FPV drones and drone missiles,” Zelensky emphasized.
The president also focused on the missile program, mentioning Ukraine’s Neptunes and their modernized version, the Long Neptunes.
Ukraine calls on its allies to invest in defense production. As reported by Defense Minister Rustem Umerov, Norway, Denmark, and Sweden have already signed contracts to finance hundreds of millions of euros worth of Ukrainian weapons.
Prime Minister Denys Shmyhal added that Ukraine has significantly increased defense production this year, and this trend will continue in 2025.
These steps allow Ukraine to strengthen its defense capabilities and actively counter Russian aggression.
Agricultural sector: forecast and challenges
Denys Marchuk, Deputy Chairman of the Ukrainian Agrarian Council, noted that despite the challenges of war, climate change, and export restrictions, Ukrainian farmers are showing resilience. In 2023, 74 million tons of grains and oilseeds were harvested, although drought losses, including 10 million tons of corn, remain significant.
Key challenges in 2025 include climate conditions, the energy crisis, fuel excise taxes, and the problem of labor booking. Growing high-margin crops such as rapeseed, soybeans and sunflower will remain a priority.
“In 2025, farmers will focus on high-margin crops such as rapeseed, soybeans, and sunflower. They traditionally hold a high price, which allows them to compensate for costs even in difficult conditions. This season, these crops have proved to be economically viable,” said Mr. Marchuk.
Mr. Marchuk also emphasized the importance of partnership with the EU. “It is crucial for us that the duty-free trade program is extended, as it opens up new opportunities for integration into the European market,” summarizes the Deputy Chairman of the Ukrainian Agrarian Council.
Elections 2025: expectations and reality
Political analyst Volodymyr Fesenko in an exclusive commentary for
“These are not just fabrications, but the desire of many Ukrainian politicians, especially those from the opposition camp,” Fesenko said.
According to him, “the electoral fever has begun,” which began after Donald Trump won the US presidential election. After that, a psychological effect was triggered. Like many Ukrainian politicians and many ordinary citizens, many came to the conclusion that the war would end very quickly.
The political scientist emphasized that many expect a quick cessation of hostilities and, accordingly, elections to be held “as early as spring or early summer.” Fesenko explained this as follows:
“They hoped that peace would come tomorrow. Just as they once predicted a ceasefire on January 20 or 25, but it did not happen.”
According to Fesenko, this electoral fever is a result of expectations of peace talks and a quick peace, but also reflects the constant focus of politicians on elections. According to the political scientist, many Ukrainian politicians “live in their own subjective reality,” believing in scenarios that have no objective prerequisites for realization.
“They are already drawing these scenarios, but in fact, there are no objective grounds for this,” he concluded.
Fesenko also noted that many politicians have “forgotten about the war,” and, unfortunately, it reminds them of itself and will continue to do so in the future.
