Prolonged air raids: how the economy reacts to them
12 November 15:16
For almost three years in a row, Ukraine has been living in conditions of constant and protracted air alerts. They halt the activities of both the private and public sectors. As Russia prepares for a massive missile strike and has amassed a batch of missiles, Ukraine is likely to experience even more air alerts in the near future.
Recently, the head of the National Security and Defense Council’ s Center for Countering Disinformation, Andriy Kovalenko, said on his Telegram channel that the Russians had manufactured and prepared a new batch of long-range missiles for massive shelling of Ukrainian targets.
“The Russians are ready for massive shelling. There are enough missiles, they are accumulated at strategic aviation airfields and are still being accumulated. Aviation is also ready,” Kovalenko said.
Prolonged air alerts – why they are not so dangerous for Ukraine’s economy
Chairman of the Committee of Economists of Ukraine Andriy Novak in an exclusive commentary for
According to the expert, at first glance, air raids may indeed seem to cause economic losses, as enterprises, especially in the public sector, which are required to go to the shelter during an alarm, stop working. As a result, production and other processes are temporarily halted. However, according to Novak, the economic consequences of such interruptions are not so catastrophic.
“When companies or organizations are forced to stop working during an air raid, everything that they didn’t have time to do will be caught up later. That is, after the alarm is over, work resumes and all tasks are completed,” Novak said.
According to him, even if enterprises or organizations are downtime for some time, the missed time is made up during normal operation. Novak also emphasized that the economic impact of air raids should not be viewed linearly.
“It is necessary to analyze not only the moment of downtime but also the next steps. As a rule, companies operate at nominal production capacities, and owners always try to maximize the use of these capacities to compensate for the lost time,” the economist explained.
Shelling and destruction cause much more problems for the economy than air raids
According to the expert, even if the production process does not take place during the alarm, all the necessary documents are prepared and tasks are finalized later. As a result, the overall economic effect of air raids is not so significant. However, Novak notes an important point: direct economic damage arises from the destruction of infrastructure during shelling, bombing, or falling debris from missiles or UAVs, which directly leads to significant financial losses.
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Thus, while air raids may temporarily suspend the operation of businesses, their impact on the overall economy is not catastrophic. Instead, the destruction of infrastructure due to hostilities is a real threat to the country’s economic stability.
But we should not relax: which business sector is still suffering from constant air raids
At the same time , economist Oleg Pendzin, specially for
“Where there is a great responsibility for the safety of visitors, and where retailers are forced to stop serving customers and close retail space, this causes significant costs and losses. This is especially true when arrivals lead to large-scale deaths. This is an objective reality,” says Penzin.
Pendzin does not ignore the service sector either. According to him, banking institutions are particularly affected, as they are forced to close their branches. Other businesses that provide services to the public, such as hairdressers, for example, are trying to reduce losses, but this carries great risks. It is especially dangerous in areas close to the hostilities.
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As for the total economic losses for the state, Pendzin notes that there are no accurate calculations.
“It is impossible to determine exactly how much Ukraine is losing due to the shutdown of small, medium and large businesses during air alerts. There have been estimates that it could be up to 0.5% of GDP, but these data are approximate and have not been confirmed. The dynamics of air alerts in Ukraine varies greatly from region to region, which makes it difficult to make accurate calculations,” the economist concludes.
In general, prolonged air alerts do not have a significant economic impact on the overall situation in the country. Despite temporary production stoppages during the alerts, the economy continues to function, compensating for the lost time after they end. Business owners always try to maximize their capacity to avoid significant losses. The main economic problems arise from the physical destruction of infrastructure caused by the hostilities.
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Author: Daryna Glushchenko
