Kryvyi Rih, the industrial city in central Ukraine and hometown of President Volodymyr Zelensky, is facing severe economic and infrastructural challenges amid ongoing Russian military attacks. The city, home to about 600,000 people, has seen its largest employer, ArcelorMittal’s steel and mining complex, halt operations following a series of recent Russian missile strikes that damaged its facilities and forced the furnaces to shut down. Local officials describe the situation as dire, with essential services such as hospitals, schools, and public transportation struggling to remain operational.
Mayor Oleksandr Vilkul, a former mining executive, stated that Kryvyi Rih’s condition is amongst the worst in Ukraine outside active front lines. The halt of steel production reflects a broader collapse in Ukraine’s steel industry, which accounted for roughly 10% of the nation’s economic output before the war. Similar disruptions are evident in other industrial centers like Zaporizhzhia, where major mills have ceased operations and exports have stalled. The cumulative effect of Russian drone and missile strikes this summer has further damaged factories, warehouses, ports, and railway infrastructure, leading to widespread business closures and declining tax revenues.
Ukraine’s government is currently grappling with the country’s most significant budgetary crisis since the full-scale Russian invasion began in 2022. The estimated funding gap for the year stands at approximately $56 billion, with military spending representing nearly half of this amount. Ukraine’s defense costs have risen steeply, reaching $190 million per day of combat, driven by the need to acquire advanced medium- and long-range weaponry capable of targeting Russian military and energy infrastructure. Additionally, expenditures have increased due to the expanded military personnel and growing social support for families of fallen or disabled soldiers.
Despite receiving nearly $200 billion in financial assistance from Western partners since the conflict began, Ukraine faces delays in billions of dollars in foreign loans and aid, partly due to stalled parliamentary approval of key reforms, including tax and anti-corruption legislation demanded by international allies. Prime Minister Sergii Koretskyi acknowledged the challenges, noting the government has frozen non-essential spending, including rebuilding infrastructure, to prioritize defense, public-sector wages, and pensions. Lawmakers have set an October 15 deadline to pass necessary legislation in hopes of unlocking delayed aid funds.
Economic data reveal that while Ukraine spent over $44 billion on defense during the first nine months of this year, tax revenues totaled only about $42 billion amid a slowing economy. Russian attacks have caused significant structural damage, leading to an estimated loss of 70 billion hryvnias (around $1.5 billion) in tax revenue by year-end. This fiscal strain is compounded by subdued business confidence, with some Ukrainian companies scaling back, delaying investments, or outright canceling projects due to heightened risks.
The agricultural sector, a critical source of export revenues, has been notably affected by the ongoing blockade of Black Sea ports, resulting in a 36.6% drop in grain exports in September compared with the previous year. Economy Minister Oleksandr Kravchenko indicated that approximately $40 billion in export revenue is at risk this year because of the blockade. Economic growth forecasts for 2024 have been lowered to between 0.5% and 1.5%, down from 1.8% previously projected.
Looking ahead, Ukraine is preparing its budget for 2024, which includes a proposed defense spending record of $110 billion, excluding allied military aid. Finance Minister Sergii Marchenko highlighted an already existing budget deficit exceeding $32 billion. He suggested that using frozen Russian assets held by European countries, totaling hundreds of billions of euros, could help alleviate some fiscal pressures. Meanwhile, officials underscore the limits of domestic resource mobilization given the war’s scale and call for accelerated international support to sustain Ukraine’s defense and economic resilience.