Bloomberg: Ukraine races to meet global trade goals as Russia war drags on

Ukraine's Infrastructure Minister Oleksandr Kubrakov has said that capacity at existing border posts and is opening two new crossings on Ukraine’s frontiers with both Poland and Romania. Last month, he negotiated a deal with the EU so truckers only have to clear customs once. A second ferry went into operation across the Danube to carry more grain to the Romanian port of Constanta, and fuel back.

A defunct railway line through Moldova is also being reopened to feed traffic, while the river port of Reni - all but abandoned after the 1991 Soviet collapse - has returned to its 11 million metric ton per year capacity, from just 200,000 tons before the war, Kubrakov said, according to Bloomberg.

That’s got Ukraine’s exports to about 30% of what they were, and there’s more to come, said Kubrakov. Yet it’s nowhere near enough to get the economy out of intensive care, and time may not be on Ukraine’s side.

A tour of farms, strip mines and factories along the Dnipro river, which carves a path up to a mile wide through the nation, makes clear the scale of the challenge facing Volodymyr Zelenskiy’s administration as it tries to revive the economy while landlocked and at war.

Transport costs have soared and production stalled as Russia chokes off access to the Black Sea, through which Ukraine used to send as much as 80% of exports before the war. Factories face the unfamiliar tasks of hosting refugees, equipping staff fighting at the front, and acting as distribution centres for aid.

The International Monetary Fund projects Ukraine’s gross domestic product will shrink 35% this year, shrivelling tax revenue and leaving the state dependent on international donors to fill a monthly budget deficit that Finance Minister Serhiy Marchenko has put at $5 billion. Without that aid, Ukraine would quickly struggle to support the millions of people displaced by war, pay public salaries, or sustain the costs of its military campaign.

The risk, as Russian forces grind forward in the east, is that Ukraine gets ripped from that financial lifeline going into a difficult winter. Already there are signs of donor fatigue as the European Union squabbles over further aid, while the recent exits of British and Italian prime ministers Boris Johnson and Mario Draghi highlight the potential for policy change. Maintaining unity is likely to become harder as the conflict’s impact on energy markets triggers inflation and recessions around the globe.