What have three years of Putin's war done to the economies of both sides?

As the conflict enters a fourth year, analysts are examining the health of Ukraine and Russia - and who will be the better bet for investors once hostilities stop. The answers might be surprising, writes

- Phillip Inman

As Ukrainians prepare to enter their fourth year dealing with the harsh daily realities of life during conflict with Russia, few will be musing on the comparative economic health of the warring nations. However, inflation figures released either side of the border showed the continued toll the conflict has had on citizens of both countries - with price rises running at 9.5% in Russia and 12% in Ukraine.

Three years on since Russia's full-scale invasion of Ukraine in 2022, economists are examining the relative health of each country.

Standard measures of economic growth favour Moscow, as do the outstanding costs of rebuilding damaged infrastructure, should the talks in Saudi Arabia between Vladimir Putin's team of negotiators and Donald Trump's bring forward an unlikely - at least in terms of being long-lasting - peace deal.

Russia's gross domestic product (GDP) slumped to -1.3% at the outset of the war but has since recovered to post 3.6% in each of the last two years, according to the International Monetary Fund. Ukraine's GDP sank by 28.3% in 2022 before rebounding to 5.3% in 2023 and 3% in 2024.

Despite wide-ranging sanctions, Russian factories have continued to source the components and raw materials needed to keep the war machine going. An influx of funds from the illicit sale of oil and, to a lesser extent, natural gas, nickel and platinum, has allowed for an expansion of a state apparatus that 18 months ago looked on its knees.

Reconstruction hopes

Despite Russia's lengthy offensive, Ukraine has a brighter future as an independent nation than Moscow propaganda would have anyone believe.