Ukraine‘s Economic Divide Widens as War Shifts Investment West
KYIV, Ukraine – November 6, 2025 – While a lasting peace could offer a path to recovery, the war in Ukraine has dramatically reshaped its economic landscape, channeling private investment towards safer western regions while leaving eastern cities like Kharkiv facing an uncertain future. the disparity highlights the escalating risks associated with proximity to the conflict and the growing possibility of a permanently fractured Ukrainian economy.
The concentration of investment underscores a fundamental shift in Ukraine’s economic priorities. Sergey Fursa, deputy director of the investment firm Dragon Capital, stated that his company is currently avoiding any projects east of the Dnieper River, signaling a widespread investor reluctance to engage with areas vulnerable to ongoing Russian aggression. This hesitancy is reflected in construction data: between January and June of this year, builders commenced 15,559 new homes in the Kyiv region, 6,956 in Lviv, but a mere 199 in Kharkiv.
analysts suggest that revitalizing heavily damaged cities like Kharkiv will necessitate substantial government intervention, including targeted tax incentives scaled to reflect the level of risk associated with each location. Kyiv is expected to remain a magnet for capital, skilled workers, and population growth, while Odessa’s role as Ukraine’s primary port secures its economic future. however, much of eastern Ukraine risks becoming a struggling “rust belt,” perpetually threatened by the specter of renewed conflict.
