Authors: Maksym SamoiliukCentre for Economic Strategy. Garry PolushkinBerlin Economics.
Translated from the original published in FAZ PRO World Economy.
Four years after the start of the full-scale invasion, the Ukrainian economy is not only holding its own but also showing signs of growth. Germany has positioned itself as an important partner on Ukraine’s path to EU accession.
The Federal Republic is helping to ensure that the economy of a country that is attacked by Russian drones almost every night is performing comparatively well. Although Ukraine is not yet a member of the EU, the two countries already cooperate in all four areas of the single market: free movement of goods, services, people and capital.
Bilateral trade in goods alone reached a record high in 2025, while ties in the areas of services, labour and investment continued to deepen. According to preliminary data, trade volume in 2025 amounted to €12.4 billion, which is 52% higher than the volume of trade between Russia and Germany. This relationship is not one-sided: Ukraine is important for Germany’s supply chains and labour market, just as Germany remains one of Ukraine’s most important economic partners.
Germany has a trade surplus with Ukraine. Before the war, German exports to Ukraine consisted mainly of cars and trucks, medicines and agricultural machinery. Since 2022, the structure of exports has changed significantly: Germany exports primarily defence and military products. Ukraine has become an important market for these high-tech dual-use goods.
On the other hand, agricultural products play an important role. Ukraine supplies Germany with a significant proportion of its rapeseed requirements, as well as maize and soya. Together, these export goods contribute to Germany’s food security and underscore Ukraine’s role as a reliable supplier even during wartime.
In addition, wires and cables remain important export goods from Ukraine and testify to the country’s integration into the EU automotive industry supply chain. When the war began, Volkswagen was forced to temporarily introduce short-time work schemes at its plants in Zwickau and Dresden because these components could not be imported from Ukraine in the first months of the war.
The Federal Ministry for Economic Affairs and Energy supports bilateral economic relations with a range of instruments. For example, Hermes insurance guarantees protect German export transactions in Ukraine against economic and political risks. Since the start of the war, export transactions worth €1.5 billion have been covered under this state guarantee system.
Since 2022, bilateral relations in the services sector have also deepened. Trade in this area has almost doubled, from €900 million in 2021 to €1.6 billion in 2024. Before the war, Germany had been importing mainly Russian gas via Ukraine for many years, meaning that the country served as a transit provider for gas supplies. Today, Ukraine is increasingly providing IT services.
In 2023, the trade balance in services changed, and Germany is now a net exporter of services to Ukraine. This largely reflects statistical effects related to Ukrainian refugees, as their spending in Germany (based on bank transfers) is recorded as German exports of travel services.
Behind these figures lies further close cooperation in IT and other service sectors, which has potential for growth. In 2024, the EU overtook the US as the most important market for Ukrainian IT services: Germany is the third-largest market within the EU. With Ukraine’s steps towards joining the single digital market, deeper relations in the IT sector are to be expected.
Ukrainians in Germany
Population migration has become the most visible aspect of the relationship. According to data, around 155,000 Ukrainians were living in Germany before Russia’s full-scale invasion. By the end of 2024, this figure had risen to over 1.3 million, making Germany the country with the largest Ukrainian community in Europe.
Women and children, meanwhile, make up the majority of Ukrainians in Germany, while many young people are of working age and can enter the labour market. Germany has focused on long-term integration and prioritised language learning and skills acquisition over rapid employment. Initially, this led to lower employment rates than in some other countries, but results have improved. According to the Federal Employment Agency, 374,000 people with Ukrainian citizenship were employed as of January 2026. This represents 38% of the total number of Ukrainians of working age.
German companies show great interest in Ukraine
Business relations continue to strengthen ties. Despite the war, large German companies continue their activities, and new investments continue to attract interest. The number of member companies of the German-Ukrainian Chamber of Industry and Commerce has grown by 75% since the start of the war until the end of 2025. Germany is one of Ukraine’s most important investment partners. The volume of direct investments by German companies in the third quarter of 2025 amounted to $2.2 billion. Major German companies such as Bayer, Fixit, Notus and Goldberg Solar have announced new investments and started to implement them.
As foreign direct investment is one of the most important drivers of economic growth, the German government actively promotes German investment in Ukraine. Despite Russia’s attacks, the German government has maintained its state guarantees against war risks for German investors in Ukraine. Moreover, Ukraine has become the number one destination country for this German government guarantee system. Since 2022, 50 projects have been insured.
However, from a macroeconomic perspective, current foreign direct investment inflows remain below the level necessary for Ukraine’s economic recovery. Joint efforts by Germany and Ukraine could improve this situation. These include a recent study monitoring progress in the implementation of 30 reform proposals identified by German companies in Ukraine, further integration into the European single market and joint efforts to improve investment security.
Overall, the deepening of bilateral relations goes beyond trade, people and capital. Germany is one of Ukraine’s most important partners in meeting military, financial and humanitarian needs, including during the current energy crisis.
In addition, the German government and German civil society are actively bringing together partners and interest groups. Since the start of the war, the German government has organised a series of high-level international conferences in support of Ukraine, including the G7 Reconstruction Conference, the Ukraine Recovery Conference and the annual German-Ukrainian Economic Forum.
German-Ukrainian relations will also be the focus of the fourth ‘Café Kyiv’ in Berlin on 23 February. This event, initiated by civil society organisations under the leadership of the Konrad-Adenauer-Stiftung, will be opened by Federal Chancellor Friedrich Merz. During this one-day festival, Ukrainian and German representatives from politics, science, culture and business will come together to exchange ideas.
