Rebuild with Ukraine: In initial stages along contemporary trade routes and vibrant sectors

Ukraine's trade: Reorientation and substantial decline in (short-term) export potential

Geopolitical developments have strongly shaped Ukraine’s economy and external trade patterns over the last decade, incl. the last years of active war. This holds true in volume terms, with regards to import and export routes, actively traded goods and services as well as in terms of external trade partners. The hybrid war and Crimea annexation resulted in a significant drop of export and import volumes in 2014 and the following years. A normalization in terms of trade volumes back to pre-hybrid war levels had been reached by 2021. Due to the full-scale invasion in 2022, Ukrainian exports have dropped once again significantly, while imports (incl. war-driven goods) received a substantive boost.

As of 2025, Ukrainian exports were some 35 per cent below 2021 levels, while imports surged by some 30 per cent during this same period. Therefore, Ukraine is currently running a record trade deficit at 28 per cent of GDP. Imports amounted to some USD 90 bn as of 2025, compared to exports at some USD 38 bn. As a result, Ukrainian trade deficit shortfalls amounted to some 40 to 60 USD bn in recent years, compared to some 8 to 10 USD bn prior to the full-scale invasion. Reviving exports (incl. sectors with comparative and/or competitive advantages like agriculture, IT & Defense Tech, IT service exports) and traditional export routes (e.g. for agricultural goods) following a potential conflict stabilization will be key to returning to a more stable macroeconomic equilibrium. In such a scenario the chronic need for external and Western macro-financial assistance will be also substantially reduced. Over the next 2 to 3 years, we see a potential to boost Ukraine’s exports to a level of around USD 70 to 80 bn, while imports are likely to hover around the USD 100 bn to 115 bn level.

In the following commentary we will identify sectors and/or geographies that might offer export opportunities for Ukraine and/or business opportunities for Western/foreign companies. During an early phase of conflict stabilization (1 to 2 years) economic activity and recovery efforts will most likely be shaped by current trade and import patterns. This holds especially true as any conflict settlement might result in an initial phase of remaining uncertainty. Moreover, current trade ties already reflect ongoing reconstruction activities during war times and military necessities. We believe that both factors will continue to play a defining role in the initial phase of conflict stabilization. Launching large-scale reconstruction efforts will take time, while keeping a substantive military deterrence remains crucial for Ukraine. Additionally, it will take time until traditional extra-EU trade routes can be re-opened. In certain cases, substantive re-building of infrastructure will be required. Furthermore, it will take time before Foreign Direct Investments (FDI) will pick up substantially. Therefore, it is key to understand key drivers of Ukraine’s current external trade relations although they may once again gradually change in a more stable environment. The following analysis provides a comprehensive overview of Ukraine's external trade patterns with a particular focus on trade relations with the European Union (EU) and resulting business opportunities.

EU as Major Trading and Investment Partner: Further trade and FDI upside closely linked 

On aggregate, the EU has become Ukraine's core trading partner both in exports and imports over the last decade. Since the 2014 Association Agreement with the EU and Ukraine’s EU-integration aspirations, exports to the EU have grown significantly, reaching 58 per cent of Ukraine's exports by 2025, up from around 26 per cent in 2013. That said, the increase in the EU’s share of trade in Ukraine from 2013/2014 up until 2021 (trade share at some 40 per cent) was rather gradual, and it was only the full-scale invasion that created entirely new realities and trade imperatives. As of today, Poland, Germany, Italy, the Netherlands, and Spain are key EU export markets for Ukraine, with Poland turned into the largest EU trade partner during the hybrid and full-scale war phases. Imports from the EU also increased, focusing on machinery, food, and chemicals, with EU accounting for nearly half of Ukraine's imports by 2025. Key and/or neighboring EU countries (Poland, Germany, Italy, Czech Republic, Slovakia) play a dominant role in supplying critical goods, especially during the war phase. 

With a ratio of 50 per cent, the share of foreign trade with the EU in Ukrainian total trade has reached a level we are seeing in parts of the EU candidate countries in the Western Balkans, with stronger increases in recent years. However, the level of trade integration has not yet reached the level of key industrialized EU member countries in CE/SEE (Czechia, Slovakia, Hungary, Poland), where trade with the EU is amounting to some 70 per cent of total trade, in some cases 80 per cent. Therefore, some upside potential remains. This holds especially true if the FDI penetration of Ukraine will pick up in the years following a conflict settlement. In terms of FDI the EU remains the dominant investor in Ukraine, with a share in the total FDI stock at or above the level in the Western Balkans and/or CE/SEE EU member countries. However, the overall stock of FDI remains at a very low level in Ukraine, a development that is likely to change only very gradually once a more sustained conflict settlement will be achieved. 

Rebuild with Ukraine – EU not the only player in town

Overall, the deep level of EU-Ukraine economic integration and trade relationships create opportunities for businesses in machinery production, agriculture exports, food processing, energy equipment, and dual use plus defense-related products and services that meet EU standards and demands. 

However, it is important to acknowledge that China has developed into a key trading or import partner for Ukraine. China became the second-largest importer into Ukraine (after the EU) since 2016, with importing volumes from China increasing steadily. Chinese imports accelerated visibly since the start of full-scale war and reached almost USD 20 bn in 2025, representing some 22 per cent of total imports. In relative terms the share of imports from China has increased significantly from some 10 per cent back in 2015. We understand that price, availability to accelerate deliveries quickly, and mass production play a major role here. Therefore, Ukraine obtains a solid portion of imports from China in the machinery sector, including electric cars, energy generating and saving equipment as well as components for electronics. We see trade relations with China also as a supportive factor for the substantive advances of Ukraine in the Defense Tech sector. As of 2025, China had been the single largest bilateral import partner country for Ukraine, outpacing aggregate imports from Germany and Poland. It seems that China is offering certain products and flexibility that cannot be offered currently by Western trading partners. On a single country basis, the US developed into a top-5 trading partner of Ukraine, following Turkey, as of recently. It is logical to see increasing US imports into Ukraine during the full-scale war, especially in 2025, when the concept of providing military assistance to Ukraine has been changed into commercial purchases of weapons and military equipment (PURL program). Therefore, a hike in imports by 33 per cent to the historically highest volume of USD 4.6 bn looks justified if considering the aforementioned arguments coupled with greater imports of coal by one Ukrainian (private) metallurgical company on the back of its shortage domestically. 

Overall, it looks like both the U.S. and China are likely to take a fair share in the reconstruction of Ukraine and will remain key partners in rebuilding Ukraine with Ukrainians. For China rebuilding of Ukraine will be an element to manage (domestic) excess capacity, while the USA is likely to continue its path of commercialization of Ukraine support and rebuilding efforts. Not to forget that the recently signed US-Ukraine Minerals Agreement – that is open to other partners – offers specific opportunities in terms of reviving Ukrainian exports. In this context it is important to stress that the EU has also signed a raw materials partnership with Ukraine in 2021 (that has not delivered too much tangible benefits up to now).

With regards to the economic relations with China, we see certain potential to boost Ukrainian exports. As of today, the economic relationship seems fairly imbalanced given the substantive relative increase in Chinese imports, while China’s share in Ukrainian exports remains well below 2015 and 2021 levels. With regards to the regional perspective, it is important to stress that on top of Poland as key trading partner for Ukraine four CE/SEE countries are represented among Ukraine’s top-10 trading partners as of 2025 (Czechia, Romania, Hungary, Slovakia), ahead of larger Western EU economies like the Netherlands or Spain. In fact, major CE/SEE economies are currently representing some 22 per cent of Ukrainian foreign trade, up from 14 to 15 per cent in 2015 and 2021. Hence, Rebuilding with Ukraine is likely to see a fair contribution from neighboring CE/SEE countries, which acted as an important source of economic stability during war times. Moreover, Ukrainian trade relations with the CE/SEE countries are balanced when it comes to exports and imports. While most CE/SEE countries (except for Hungary) have strongly increased their share in Ukrainian foreign trade over the last decade, trade relations with Austria stagnated in relative terms at some 1 per cent of total trade. Hence, there is some potential to deepen bilateral trade relations in a more stable environment. In terms of economic exchange with CE/SEE countries, we expect a fair share of SME-related business to take place. Moreover, we may see smaller scale investments and/or FDI coming from those countries targeting Western Ukraine. In this context, we see Raiffeisen Bank International and its network of banks well positioned to flank emerging regional business opportunities on top of more broad-based foreign-trade-related business activities. In this context it is worth noting that Turkey also constitutes a key trading partner for Ukraine, boosting its share in Ukrainian trade close to a level of Germany.

We believe that Ukraine is eager to expand its trade with the EU, but will also cooperate pragmatically with China, the U.S., or other countries if it serves the country’s vital interests and the EU is unable or unwilling to supply suitable products in relevant economic sectors.

Business Opportunities in Agriculture, Food Exports and Mineral Exports

Agriculture remains Ukraine's leading export sector, especially to EU countries, accounting for nearly 46 per cent of exports to the region in 2025. Despite some short-term declines due to quota reinstatements in mid-2025 and harvest variability, the sector shows sustained growth potential due to Ukraine's fertile soils and increasing share of processed goods. Expansion in exports to EU and restoration of sea routes post-war will further enhance opportunities in this sector. Export opportunities do exist especially with Asian and African markets (e.g. Egypt, India), which lost somewhat in importance in recent years of active conflict. Restoring export channels and export infrastructure (ports, warehouses) that facilitate agri-trading activities into other parts of the world than the EU may also soften certain negative tonality with regards to the strong growth of Ukrainian agricultural exports into the EU. Agricultural exports to China might also act to balance the bilateral trade relations. Going forward, we also see a certain potential in resources and minerals exports out of Ukraine, which had been of higher importance historically and in pre-hybrid war times than currently. However, restoring export flows will likely require substantive investments in the first place. Hence, the near-term potential to increase mineral exports seems to be limited, while relevant resource agreements shall support much needed investment activity.

Machinery and Defense Technology Exports

Machinery has emerged as the second-largest export product to the EU, growing steadily during the hybrid war and even the full-scale conflict. We see the presence of relatively small Ukrainian companies and/or foreign subsidiaries well integrated into international supply chains in machinery products (like automotive, agriculture machinery and household appliances) coupled with their stable operating activity (due to their location mostly in western Ukraine) as a main reason for this remarkable performance. Hence, the share of machinery exports in total exports in 2025 stood at 17 per cent and exceeded the export share seen in 2013. We think that there is a solid base to boost economic activity and exports in the manufacturing sector within a short period of time in case of a conflict settlement. However, a more substantive industrial upgrading will have to be flanked by investments and plannability when it comes to energy (price) security. 

During the full-scale war, Ukraine has developed into a globally leading Defense Tech hot spot. The tense geopolitical situation on a global level may provide a sweet spot to capitalize on those achievements. We see heightened demand for Ukrainian military technologies, particularly for air defense systems such as interception of drones and missiles, with growing interest from Middle Eastern countries, Europe and Asia. Therefore, the machinery and Defense Tech sector offers strong export potential, including post-war reconstruction demands for investment goods and the expansion of military-related exports. Moreover, modern defense technology exports could lay the foundation for longer-term maintenance services as well as related service exports. Going forward, the export-oriented Ukrainian Defense Tech sector will continue to require certain technology imports, while Ukraine might be interested in gradually reducing dependencies on China in certain product areas. Hence, we see substantive potential for Western companies in the fields of IT infrastructure and dual use goods.

Imports Focus on Machinery, Energy, and Defense Equipment

The structure of imports from the EU is dominated by machinery (including weapons and energy equipment), food, and chemicals. The full-scale war has sharply increased imports of machinery related to defense needs and energy infrastructure repair, as well as energy resources, mainly fuel, gas, and electricity from EU countries, which are critical to maintain Ukraine's energy stability. Post-war reconstruction efforts will drive further import demand for EU investment goods and services. We think that China will play a certain role in the energy and infrastructure rebuilding, while Ukraine might be more focused on Western and EU cooperation when it comes to defense and dual use related import needs. However, we think that the energy sector will also offer substantive import and investment opportunities for Western (European) companies.

Logistical and Geopolitical Considerations

The blockade of sea routes by the aggressor shifted most exports to land routes through neighboring EU countries, raising their importance. Neighboring countries especially Poland have steadily grown in significance for imports and exports, driven both by proximity and by necessity due to war disruptions. This geographic factor presents opportunities in logistics, transportation, and supply chain services within the EU-Ukraine trade corridor. We do not think that foreign trade patterns of Ukraine will easily shift back to the status prior to the full-scale war. However, we see substantive potential to boost Ukrainian exports via investments into logistical infrastructure that can support additional trade via sea routes, which will be mostly extra-EU-trade, e.g. Asia, Africa, partially Turkey.

Service Sector and IT Sector

While the full-scale war severely disrupted traditional services exports like transit services, the IT sector remains a robust source of revenues from exports to the EU and globally. IT (service) exports, although facing some decline during wartime mobilization, are poised for a substantive recovery post-war with opportunities for digital services, military-related technology services, and reconstruction-related IT projects. During the full-scale war the IT sector, like other sectors of the economy, started to face declining orders and active mobilization of employees. After peaking in 2021, IT-related exports declined slightly and stabilized at around USD 6.6 to 6.9 bn during the time of full-scale war. Nevertheless, a strong growth trend over the last 15 years is clear evidence of the sector’s strategic importance for the economy. While transport services accounted for the majority of service exports with a share up to 39 per cent in 2013, it declined to only 16 per cent in 2025. The IT sector, on the other hand, made a remarkable jump in its contribution to total service exports to 43 per cent from 6 per cent in 2013. Going forward, we see potential to boost IT (service) exports to 10 to 15 USD bn over the next 2 to 3 years. Optimistic assumptions and/or local policy ambitions are targeting IT service exports of some USD 20 bn by 2030. This would place Ukraine among the top-10 global IT service provider countries. 

Even though the near-term potential of the IT sector is constrained by current security risks, we believe that an end of the war and absence of operational risks will substantially strengthen the sector’s recovery. Swift upscaling in this sector is supported by limited physical investment needs plus operational flexibility. We also think that a significant potential for exporting new weapons and military-related technologies in the Defense Tech space will raise exports of services related to maintenance and operation. Moreover, substantive digitalization needs in Western Europe are also a supportive factor for more disruptive solutions and/or IT (service) exports from Ukraine.

Summary: Ukraine’s Strategic Trade Pivot – the EU must catch the upside in IT and Defense Tech

Ukraine's strategic EU rapprochement, recent war-related trade shifts as well as the 2014 Association Agreement provide a solid framework for expanding trade with the EU. Key business opportunities lie in agriculture exports, machinery and military technology exports, energy and dual-use plus defense-related imports, IT services, and logistics leveraging geographic proximity. Post-war reconstruction promises substantial growth in imports of machinery and investment goods from the EU, while Ukrainian defense innovation offers growing export potential and growing import demand. European businesses should be well prepared to seize business potential in sectors like dual use and Defence Tech related products. We see a substantial potential for Ukraine to capitalize on this newly build competitive advantage, while some traditional (export-oriented) economic sectors or activities are unlikely to come back to pre-war levels (e.g. steel, metallurgy). With regards to the rebuilding of Ukraine, the EU will face competing claims made by other major supporters of Ukraine currently not among Ukraine’s top 15 to 20 trading partners (e.g. Nordic countries, Japan, Korea) as well as China in particular. The EU must address this challenge in an informed manner without losing sight of its own interests.