Q1 2025 Ukrainian Export Review: Manufacturing Resilience Amid Global Headwinds

Sunflower oil remained the anchor product at €287 million, but frozen fruit and vegetable exports to the EU surged 28% to €89 million as European retailers expanded Ukrainian supplier relationships. Confectionery exports reached €67 million, with Ukrainian chocolate manufacturers securing new private-label contracts with UK and German supermarket chains. IT and Software Services: Sustained Outperformance The IT sector recorded €757 million in service exports, maintaining its position as the third-largest contributor at 18% of total. Year-on-year growth of 22% continues to outpace the European IT services average of 14%. The sector's distributed workforce model, developed out of necessity post-2022, has become a structural advantage, with clients valuing the business continuity it provides.

Average hourly rates for Ukrainian software development teams stabilised at €42–58, positioning them competitively between Polish rates (€55–75) and Indian rates (€22–35) while offering proximity, cultural alignment, and time-zone compatibility for European clients. Machinery and Equipment: Quiet Momentum Often overlooked in headline figures, machinery exports reached €505 million (+15.1% QoQ), driven by agricultural equipment, industrial pumps, and electrical components. German and Polish industrial buyers have increased procurement from Ukrainian suppliers as nearshoring strategies accelerate. The sector benefits from deep engineering talent and competitive pricing, though certification requirements for EU markets remain a barrier for smaller manufacturers. Textiles and Fashion: EU Integration Accelerates Textile and apparel exports totalled €336 million, up 11.8% quarter-on-quarter. The suspension of import duties under the EU-Ukraine trade agreement continues to provide pricing advantages. Ukrainian garment manufacturers serving fast-fashion and mid-market European brands increased capacity utilisation to an estimated 78%, the highest level since 2021. Renewable Energy Components: The Growth Story The fastest-growing segment — renewable energy components including solar panel assemblies, wind turbine parts, and electrical storage systems — recorded €142 million in exports. Quarter-on-quarter growth of 34.2% reflects both European energy transition demand and Ukrainian manufacturers' pivot toward higher-value-added products. This sector remains small (3.4% of total) but represents significant future potential. Notable Deals Closed: Q1 2025 Highlights While confidentiality requirements limit specific company attribution for pending deals, the following transactions illustrate the breadth and scale of Ukrainian manufacturing contracts secured in Q1:

A Dnipro-region steel producer signed a three-year supply agreement with a German automotive components manufacturer for 48,000 tonnes annually of cold-rolled steel, valued at approximately €34 million per year.

A consortium of three Lviv-based furniture manufacturers secured collective private-label contracts with a major Scandinavian retailer, with initial orders totalling €12.7 million for flat-pack furniture deliveries through Q3 2025.

A Kyiv software development company closed a multi-year enterprise support contract with a Fortune 500 financial services firm, with total contract value exceeding €8 million over three years.

A Vinnytsia-region food processing company began deliveries under a €4.2 million annual contract to supply frozen berry preparations to three EU juice concentrate manufacturers.

A Kharkiv machinery manufacturer signed export agreements with agricultural cooperatives in Poland and Romania for 340 units of grain handling equipment, valued at €6.8 million.

These deals reflect patterns observed across the market: multi-year contract structures (providing planning certainty), EU destination dominance (regulatory alignment advantages), and value-added product emphasis (moving beyond commodity positioning). New Market Entries: Geographic Diversification in Action Q1 2025 saw 23 Ukrainian manufacturing companies record first-time exports to 14 new destination countries. This geographic diversification reduces concentration risk and opens growth pathways as traditional EU markets approach penetration maturity. Southeast Asia Breakthrough The most significant development was coordinated market entry into Southeast Asian markets. Seven Ukrainian companies — spanning metals, machinery, and food processing — recorded inaugural shipments to Vietnam, Thailand, and Indonesia. Combined first-shipment value reached €8.4 million, modest in aggregate terms but strategically important as proof-of-concept for longer trade routes.

A Ukrainian metalworking company from the Zaporizhzhia region shipped its first container of precision steel components to a Vietnamese electronics manufacturer, following 14 months of certification and quality audit processes. The €340,000 initial order includes provisions for quarterly expansion if quality benchmarks are met. Middle East Expansion Six manufacturers entered Gulf Cooperation Council markets (UAE, Saudi Arabia, Qatar) for the first time, with combined Q1 exports of €5.1 million. Food products (halal-certified confectionery, sunflower oil) and construction materials (steel rebar, ceramic tiles) dominated these entries. Dubai's role as a re-export hub positions these initial shipments as gateways to broader regional distribution. Central Asian Growth Kazakhstan, Uzbekistan, and Georgia saw first-time entries from 10 Ukrainian companies totalling €3.8 million in Q1 shipments. Machinery and agricultural equipment dominated, leveraging shared Soviet-era equipment standards and established transport corridors through the Caucasus. Price Trend Analysis: Indexed Performance by Sector Tracking export prices against a Q1 2024 baseline (index = 100) reveals divergent sectoral dynamics:

Metals & Mining: Index 108.4 — steady recovery from 2023 lows, but still below 2022 peak Agriculture & Food: Index 112.7 — driven by processed product mix shift and commodity price recovery IT Services: Index 106.2 — modest rate increases reflecting talent competition Machinery: Index 104.8 — stable pricing with volume gains Textiles: Index 103.1 — competitive pricing maintained to defend market share Renewable Energy: Index 118.9 — premium pricing for certified European-market components

The aggregate manufacturing export price index stands at 107.3, indicating that Ukrainian exporters have successfully passed through approximately 70% of the cost increases experienced over the past year while maintaining competitive positioning.

Quarter-on-quarter price movement shows acceleration in Q1 2025, with the aggregate index rising 4.1 points versus 2.8 points in Q4 2024. This suggests pricing power is strengthening as supply chains stabilise and quality perceptions improve among international buyers.

"Ukrainian export pricing has found its equilibrium — competitive enough to win contracts, robust enough to sustain investment in quality and capacity." Currency Impact Assessment: Hryvnia Dynamics and Margin Effects The Ukrainian hryvnia traded in a range of 41.2–42.8 per euro during Q1 2025, with an average rate of 41.9. This represented a 3.2% depreciation against Q4 2024's average of 40.6, providing a modest tailwind for exporters earning revenue in hard currency while facing hryvnia-denominated labour costs. Margin Analysis by Sector For a typical Ukrainian manufacturer with 65% local currency costs (labour, utilities, local materials) and 35% foreign currency costs (imported inputs, logistics), the Q1 currency movement translated to approximately 2.1 percentage points of margin expansion.

However, this benefit distributed unevenly across sectors:

IT Services (85% labour costs, minimal imported inputs): Maximum benefit, estimated +2.8pp margin expansion

Food Processing (mixed cost base, some imported packaging): Moderate benefit, +1.9pp

Metals (high energy costs partially USD-linked, imported raw materials): Limited benefit, +1.2pp

Textiles (significant imported fabric and dye costs): Neutral to slight negative, +0.4pp

The National Bank of Ukraine's managed float policy has provided exporters with relative predictability compared to the volatility experienced in 2022–2023. However, currency intervention reserves remain a medium-term watch factor, with Q2 2025 policy signals suggesting potential for further managed depreciation of 2–4%. Hedging Behaviour Survey data from Ukrainian exporter associations indicates that hedging activity increased substantially in Q1. Approximately 34% of surveyed manufacturers reported using forward contracts or options to lock in exchange rates for Q2 deliveries, up from 22% in Q1 2024. This risk management maturation reflects both increased financial sophistication and access to more developed hedging products through Ukrainian banks. Methodology and Data Sources This analysis draws on multiple data streams to construct a comprehensive picture:

Ukrainian State Statistics Service monthly export data (provisional figures through February 2025, estimates for March)

National Bank of Ukraine balance of payments data and currency statistics

EU Eurostat trade flow databases for Ukrainian imports by member state

Private sector surveys conducted by Made in Ukraine in partnership with industry associations (147 manufacturer respondents)

Customs and logistics data from Polish and Romanian border crossing authorities

Port throughput statistics from Odesa, Pivdennyi, and Chornomorsk

IT industry data from IT Ukraine Association and DOU.ua platform analytics

Confidence levels vary by metric: aggregate export values carry ±3% uncertainty due to provisional March data; sector-specific breakdowns carry ±5%; new market entry counts are comprehensive for documented transactions but may undercount small-scale shipments. Q2 2025 Forecast: Scenarios and Confidence Intervals Looking ahead to Q2 2025, we model three scenarios based on key variable assumptions around logistics capacity, European industrial demand, and geopolitical stability. Base Case Scenario (55% probability) Total Q2 Exports: €4.35–4.55 billion (+3.3% to +8.1% QoQ)

This scenario assumes:

Continued stability in Black Sea grain corridor operations

European industrial production growth of 1.2–1.8%

Hryvnia trading in the 41.5–43.5 per euro range

No major escalation affecting key production regions

Under base case conditions, metals and IT services maintain growth trajectories, agri-food exports benefit from seasonal harvest processing, and renewable energy components continue their expansion.

Upside Scenario (25% probability) Total Q2 Exports: €4.55–4.85 billion (+8.1% to +15.2% QoQ)

This scenario requires:

Resolution of specific logistical bottlenecks at Polish border crossings

Faster-than-expected European manufacturing recovery (automotive sector key)

Successful completion of additional EU-Ukraine trade facilitation measures

Currency stability or modest further depreciation

The upside case sees accelerated market share gains in machinery and textiles, with several large-scale contracts (currently in negotiation) converting to confirmed orders.

Downside Scenario (20% probability) Total Q2 Exports: €3.90–4.20 billion (-2.4% to -0.2% QoQ)

Risk factors that would trigger this outcome:

Significant disruption to Black Sea shipping routes

European recession signals hardening (PMI below 48)

Major infrastructure damage affecting key production facilities

Currency volatility exceeding managed float parameters

Even in the downside case, the structural improvements in export diversification and logistics resilience