On 24 August 2026, Ukraine marked the 36th anniversary of its independence — and did so amid a paradoxical economic conjuncture. The defence-industrial complex is showing record growth, yet the rest of the economy is contracting. The country has reached a threshold beyond which GDP growth alone no longer guarantees either the return of millions of citizens from abroad or a sustainable post-war recovery. A significant share of current growth is still financed by external partners, and this support is not indefinite. That is precisely why the question of which reforms, tax changes and income levels are needed to turn the "inertia trap" into a high-tech leap over the next five years has become central to the economic agenda.
The growth paradox: the defence sector pulls the economy, the civilian sector shrinks
"This year, the defence-industrial complex remains the main driver of economic growth. At the same time, the civilian sector is increasingly suffering from the escalation of the war: we are already seeing a slowdown in consumption, the impact of destroyed business assets and logistics. In other words, growth in the defence sector does not yet mean healthy growth of the entire economy," said Elena Bilan, chief economist at investment firm Dragon Capital, at an event organised by the Centre for Economic Strategy. She assessed the scale of the structural split candidly: if at the start of 2026 analysts expected the civilian sector's growth to simply slow to zero, by summer the forecast had been revised toward negative dynamics — a contraction of about 1% in the economy outside the defence-industrial complex. Thus, the statistical GDP growth cited in official reports largely reflects the military mobilisation of resources rather than the recovery of the consumer and production base.
Transformation or stagnation: what the National Bank says
The National Bank of Ukraine acknowledges that a return to the pre-war structure of the economy is unlikely — it has already changed substantially and, in essence, cannot be restored in its former form. "The economy will continue to transform. Priorities will naturally shift toward greater technological sophistication and industries with higher added value," the NBU press service stated. According to the regulator's assessment, one of the key new engines will be the MilTech sector — military-civilian technologies — which will stimulate the development of adjacent industries: from electronics and robotics to the aerospace sector and cybersecurity. However, the transformation, according to National Bank representatives, will cover a broader range of industries, including logistics, IT services and "green" energy. The main question that remains open is: what will happen to the Ukrainian economy when the war ceases to be the main constraint, while its consequences — a shortage of personnel, destroyed infrastructure, the need for capital and security risks — persist. "We have been working through a sustainable ceasefire scenario separately for a long time, in order to understand how quickly the Ukrainian economy could recover under such conditions," says Elena Bilan. "But for now, our base scenario remains the continuation of the war."
The return threshold: why 70% of a salary is no longer enough
Economic growth alone does not guarantee the return of people from the EU — and the reason is not only the war. According to Iryna Ippolitova, senior economist at the Centre for Economic Strategy, for a refugee what matters is not a direct comparison of the salary in Ukraine with the salary or social benefits in Germany, Poland or the Czech Republic, but the ratio of income to the cost of living. "Our analysis shows exactly this pattern: a higher level of material well-being before leaving Ukraine is associated with a greater willingness to return, whereas a better current material situation abroad is associated with weaker intentions to return," she explains. Oleksiy Poznyak, head of the Migration Research Department at the Institute of Demography and Quality of Life Problems of the National Academy of Sciences of Ukraine, reminded that even before the full-scale war, researchers used a threshold of 70% of a foreign salary as a sufficient incentive to keep a person in Ukraine. "Then the issue was keeping a person in Ukraine, but now it is about moving back. So perhaps 70% is no longer enough for a return; likely, the level that will stimulate a return will be 80–90%," the scholar says. Thus, the bar that the Ukrainian economy must overcome to become competitive for its own citizens has risen substantially.
The psychological barrier and loss of status
Money, according to demographers, is not the only and not even the main factor. Oleksiy Poznyak draws attention to the psychological barrier: many Ukrainian women abroad work outside their profession — as shop assistants, in seasonal agricultural work, in elderly care — and even a higher foreign salary does not compensate for the loss of professional and social status. At the same time, the possibility of restoring their former status, returning to their profession and professional community in Ukraine can stimulate a return even at a lower income. Iryna Ippolitova emphasises that for a sustainable migration flow "home" to form, not only macroeconomic indicators but also concrete institutional guarantees are needed: protection of labour rights, recognition of qualifications, access to housing and social services. Without these elements, even a statistically attractive salary will not turn into a sustainable decision to relocate.
Contradictory data
The expert assessments gathered in preparation for the 36th anniversary of independence show a number of inconsistencies. First, regarding the threshold of salary competitiveness: the pre-war estimate of 70% (Oleksiy Poznyak, before 2022) and the current estimate of 80–90% (the same Poznyak, 2026) differ by 10–20 percentage points, which at the scale of the Ukrainian economy means a difference of tens of billions of hryvnia in the additional per-capita income required. Second, between the National Bank's optimistic narrative of structural transformation and MilTech as the "new engine" and Dragon Capital's pessimistic forecast of a 1% contraction of the civilian sector in 2026, there is a significant gap in interpreting current dynamics: the regulator emphasises long-term restructuring, while the investment bank records immediate contraction. Third, the question of external dependence remains ambiguous: a significant share of GDP growth is financed through grants and loans from international partners, and none of the experts interviewed could name a specific horizon after which this support will be reduced. All three positions are legitimate, but their simultaneous presence in public discourse creates a picture in which "growth" and "crisis" describe the same economy at different time scales.
What is needed for a leap: reforms, taxes and a five-year horizon
The body of expert assessments voiced in August 2026 allows several conditions to be identified without which turning the "inertia trap" into a high-tech leap over a five-year period looks unlikely. The first is a tax reform aimed at broadening the tax base and reducing dependence on defence spending: without this, the civilian sector will not have sufficient fiscal space for recovery. The second is institutional guarantees for migrants: recognition of qualifications, a simplified business registration process, access to mortgage lending and social programmes. The third is diversification of funding sources: reducing the share of grant aid in GDP and attracting private investment through a predictable legal framework. The fourth is personnel policy: without the return of at least some qualified specialists from the EU and without solving the problem of demographic deficit, neither MilTech nor the "green" transformation will gain human capital. According to the Centre for Economic Strategy, without a comprehensive package of these measures, Ukraine risks getting stuck in a model where GDP growth is driven by military orders and external aid, while the civilian economy and migration balance remain in stagnation for at least another decade.
