Extreme poverty on the rise — how Ukraine's economy has changed

At the end of 2024, the economic situation in Ukraine caused mixed feelings among experts. Despite the rise in extreme poverty, the worst forecasts were avoided.

This was stated by Doctor of Economics Liudmyla Cherenko in an interview with RBC-Ukraine.

Cherenko shared her thoughts on changes in Ukrainians' incomes, the impact of the war on the economy, and the possibility of refugees' return home.

The economy works, but poverty grows

The first year of full-scale war was a real shock to the economy. But according to Liudmyla Cherenko, Ukraine has managed to avoid a catastrophic collapse. The economy works because people continue to use services, go to cafes, theaters, and other establishments. That supports jobs and economic activity.

"No economy means no country. As a state, we will be of interest to our partners for as long as our economy is alive," the expert noted.

At the same time, the level of extreme poverty has risen to alarming levels. While in 2021, the share of people with incomes below the official subsistence level was only 1.3%, in 2023 this figure rose to 9%.

Has stability been achieved in terms of wages and jobs?

Despite the challenges of war, Ukraine's macroeconomic indicators for 2023 exceeded expectations. In 2024, Ukrainian wages are gradually increasing, though the process remains uneven. Many people still live below the poverty line due to the loss of property, income, or housing.

Lшudmyla Cherenko also emphasized that the shortage of personnel in the labor market is a significant problem. In her opinion, the return of refugees from abroad depends on the availability of housing and jobs. The high cost of renting housing in large cities remains an obstacle for internally displaced persons.

Why social assistance is not available to everyone?

The social support system in Ukraine has remained almost unchanged since 2021. Programs to help low-income families and subsidies exist, but they are underutilized. At the same time, social protection does not see people with low incomes.

"Social protection is waiting for people, but they don't come," says the expert.

In order for them to receive help, the expert believes that social services need to go to them. Special studies should be conducted to identify such people.

Are there any prospects for returning to the "pre-war" level?

Despite the difficulties, according to Cherenko, Ukraine is gradually moving toward economic recovery. However, the main problem remains a sharp increase in extreme poverty, especially among pensioners and those who have lost their homes or sources of income.

As a reminder, Ukraine has seen an increase in average wages to UAH 20,590 (gross). The level of increase is 22.2%, but in some areas, employees' income increased by almost 38%.

We also wrote that on December 1, a law on a large-scale tax increase came into force in Ukraine. The increase in the corporate income tax rate for banks is one of the most important innovations.