THE ECONOMIC IMPACT OF UKRAINE’S TRADE RELATIONS WITH THE EU AMID GEOPOLITICAL CHALLENGES: AN ANALYSIS OF TRADE DYNAMICS, RESTRICTIONS AND INTEGRATION

This article analyzes the economic implications of Ukraine’s foreign trade relations with the European Union (EU) amidst the ongoing geopolitical conflict with Russia. Using a vector autoregression (VAR) model and the Granger causality test, the study investigates the statistically significant impact of Ukraine’s merchandise exports and imports to the EU on its national GDP from 2005 to 2023. The findings reveal that exports, particularly in countries like the Netherlands, Romania, and Bulgaria, have the most substantial effect on Ukraine’s GDP. Despite infrastructural damages, trade disruptions, and unilateral trade restrictions from countries like Poland, Ukraine’s reliance on the EU for both exports and imports continues to play a critical role in the nation’s economic resilience and recovery. The article also highlights the EU’s efforts to support Ukraine through initiatives like the Black Sea Grain Initiative and Solidarity Lanes. However, ongoing challenges, including logistical constraints and political tensions, hinder further integration and economic growth.