Consequences of military actions for aggregate demand and supply of Ukraine

Abstract

The purpose of this study is a comprehensive assessment of the consequences of military actions, primarily the destruction of infrastructure, for the aggregate demand of Ukraine and the supply of Ukrainian commodity producers, the identification of the main external and internal challenges that are decisive for their further development in wartime conditions and for the post-war recovery of Ukraine

The results. The study of changes in the volume of production of goods and services by the main types of economic activity, changes in the structure of gross output, dynamics of financial results of their activities and changes in the structure of profits and losses of economic activity, price dynamics made it possible to state that in wartime conditions the main emphasis of development was focused on the sphere of state administration. These processes caused corresponding changes in aggregate demand, namely, a shock increase in demand for a large range of goods for services related to ensuring the country's defense capability; a shock increase in demand for immediate liquidation of the consequences of infrastructure destruction; a significant decrease in final consumer spending and a decrease in the external component of aggregate demand.

Changes in the structure of aggregate demand led to corresponding changes in the supply of national producers: the emphasis of state policy on the development of the defense-industrial complex (OPK); emphasis of construction on the restoration of destroyed infrastructure, primarily critical; adaptation of commercial activity and agrarian-industrial complex to functioning in war conditions.

Conclusions. The absolute most significant factor in the formation of aggregate demand and supply of Ukraine in the conditions of war will remain the duration and scale of military operations. Among the consequences of the war, the situation in the energy complex and the aggravation of the problem of ensuring production in all types of activities by the workforce and, first of all, specialists, come to the fore.