THE IMPACT OF THE MIGRATION CRISIS ON THE ECONOMY OF UKRAINE

Abstract

The purpose of this article is to analyze the migration crisis and its impact on Ukraine's economy, identify key factors influencing labor migration, and assess its consequences. Particular attention is given to remittances, their role in financial stability, and risks associated with the outflow of the working-age population. The urgency of the issue stems from war-induced demographic shifts, leading to a shrinking workforce and reduced tax revenues. Mass migration affects the labor market, consumption, investment, and financial stability. The outflow of skilled workers worsens structural economic problems and hinders recovery. A key threat is the declining share of migrants planning to return home, which could further weaken the economy. The analysis of statistical data on the dynamics of migration and remittances, financial flows, and assessment of demographic trends was conducted using materials from the National Bank of Ukraine, the Ministry of Economy, international organisations, and research centres. Findings show that while remittances contributed $12.5 billion to the economy in 2022, labor shortages and declining tax revenues outweigh their benefits. In 2023, remittances dropped by 7.8%, and this trend continued in 2024, indicating deeper migrant integration abroad. A decline in banking transactions using Ukrainian accounts suggests financial adaptation overseas. Workforce reduction and labor outflow have been major contributors to GDP contraction and sectoral downturns. Remittances do not offset economic losses and cannot drive post-war recovery. The study's practical significance lies in developing strategies to mitigate migration’s negative effects and encourage citizens' return. Among the key areas for developing an effective strategy for the return of migrants to Ukraine are security, job creation (employment of migrants), adaptation to the labour market (training and professional development), and provision of affordable housing for Ukrainians who have lost their homes. Proposed policies focus on favorable reintegration conditions, access to quality jobs, financial incentives for entrepreneurship, and maintaining a stable tax system. Banking system liberalization and tax stability are identified as mechanisms for keeping migrants engaged in Ukraine’s economy. Implementing these measures will help stabilize the economy, ensure financial balance, and foster long-term development.