Ukraine Market Report — Q1 2022
The full-scale invasion began on 24 February. The ports closed, the exchange rate was fixed, capital controls were imposed, and the banking and payments systems continued operating without interruption.
Overview
The full-scale invasion began on 24 February. This report records economic and commercial conditions; the human cost of the period is not something a market report can measure and is not diminished by being outside its scope.
The immediate financial measures
The central bank fixed the exchange rate, suspended the currency market for most purposes, imposed capital controls and restricted cross-border payments — all within the first days.
The banking system continued operating. Deposits were accessible, card payments functioned, ATMs were replenished, and the payment infrastructure did not fail at any point.
That outcome was not accidental. It is the direct return on the banking clean-up of 2015 and 2016 and on the deposit guarantee framework built alongside it. A sector with the balance sheets of 2013 would not have survived the first week.
The logistics collapse and the first response
The Black Sea ports closed, removing the route that had carried the large majority of Ukrainian exports by volume.
The response was immediate and improvised: cargo redirected to the western land border and to the Danube river ports. Both were rapidly saturated. Border crossing capacity, rail gauge transhipment and river handling became the binding constraints on the entire export economy within weeks.
The relocation of enterprises
A programme to move industrial equipment and staff westward began in March, building on the pattern established informally in 2014.
The sectors that moved fastest were the ones whose assets were portable: IT, light manufacturing, pharmaceuticals, food processing equipment. The sectors that could not move were those built around fixed heavy plant.
Macro position
Output contracting severely. Exchange rate fixed. Inflation rising. Reserves supported by external assistance. Fiscal position dependent on external financing from this quarter onward.
Sectors
IT services — relocated and continued delivering; the sector's asset base is its people.
Agriculture — planting proceeded in most regions; the constraint was export logistics, not production.
Metals and heavy industry — the largest losses.
Banking — functioning throughout.
What the quarter settled
That the financial and payments infrastructure built after 2015 could operate under conditions it had never been designed for, and that the binding economic constraint was logistics rather than production or finance.
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