A Russian strike on January 20 left most of Kyiv without water or heating, as temperatures dipped below 15°C (59°F), revealing a stark divide within Ukraine: while the capital struggled, the western city of Lviv largely maintained normal services.
Two Ukraines Emerge as War Intensifies
The conflict is creating a growing disparity between a struggling east and a relatively stable west.
- Nearly four million Ukrainians are internally displaced, with nine million refugees abroad.
- Businesses are shifting westward, with approximately 30,000 relocating since the 2022 invasion.
- Ukraine’s economy contracted sharply in 2022 and remains 20% smaller than pre-war levels, but forecasts predict modest growth in 2025 and 2026.
- The influx of people and businesses is straining infrastructure in western cities like Lviv, while the east faces devastation and economic hardship.
The contrast was immediate. In Kyiv, generators roared to life, powering businesses as essential services faltered. In Lviv, a city of 720,000, life continued with minimal disruption. Mobile phone service remained reliable in Lviv, while GPS systems were disabled in Kyiv and other central and eastern provinces to thwart Russian drone guidance. The roads in the Lviv province were lit, and in good repair—a condition rarely seen in the combat zones.
According to the United Nations, approximately four million people have been internally displaced within Ukraine, fleeing areas near the fighting. Around nine million Ukrainians are refugees abroad. These displaced individuals are also bringing economic drive, with government statistics indicating that nearly 30,000 companies have changed their registered headquarters since the Russian invasion began in 2022.
While official regional GDP data during the war remains unavailable, the National Bank of Ukraine forecasts economic growth of 1.9% in 2025 and 2% in 2026. Ukraine’s economy plummeted in 2022, the first year of the invasion, and remains 20% smaller than it was before the war.
Kyiv, initially the primary destination for this economic exodus, is losing its appeal. Russian bombardments have intensified since last autumn, targeting the city’s energy infrastructure. Kyiv Mayor Vitali Klitschko reported on January 20 that 600,000 people—20% of the city’s population—had left in January alone.
Ten individuals interviewed in Lviv and Ivano Frankivsk agree that Kyiv’s influence is waning. “My feeling is that more and more businesses are ruling out Kyiv due to the energy issues and the attacks. You can hear the drones flying over Kyiv every day, but the last one I heard in Lviv was three months ago,” explained Dmitro Bidiuk, director of Rekava.
Bidiuk, 40, founded Rekava, a producer of biodegradable coffee cups, in Sumi, a city just 18 kilometers from the front lines. He relocated to Lviv with his wife in 2022 and now generates five times more revenue than he did in Sumi. “There are more business opportunities in Lviv, a larger market, more options for attracting investment, and the city is pleasant,” Bidiuk said.
Power outages are frequent in Lviv, according to data from the energy company Dtek, but they are not constant and do not exceed 10 hours. While significant, this is half the duration of outages in Kyiv. “I don’t think it will be safe to return to the east even if some kind of peace agreement is reached with Russia,” Bidiuk stated. “The Russian goal is to destroy all of Ukraine; it will only be safe when Russia no longer has the resources to continue the war.”
Viktoria Aleksieieva, an assistant at the UNESCO Cultural Hub, a training center for artists funded by the Spanish government, has resided in Lviv since June 2025. The 30-year-old left Kyiv during a period of intense Russian shelling. “I was tired of so many explosions, and the problem has only gotten worse,” Aleksieieva said, adding that the influx of artists and intellectuals at the UNESCO center is increasing, particularly women, as many men fear being detained by military recruitment patrols.
Aleksieieva is optimistic about the future, believing that millions of Ukrainians who have trained abroad will return to rebuild the east after the war. However, the Institute of Demographic Studies Mijailo Ptuja, Ukraine’s leading demographic institute, predicts that only 30% of those who fled abroad will return.
Interviewees from the east, like Bidiuk, have a more pessimistic outlook than those from the west. “I am realistic; I know I will not return to my city and that the Russians will continue to advance in Zaporiyia,” lamented Valeria Buchasta from her restaurant in Ivano Frankivsk. She is 31 years old and from Berdiansk, a city in the Zaporiyia province occupied by Russia in 2022. “At that time, I told my husband that we should go far away, to the west, because I didn’t want to settle somewhere in the east and have to emigrate again.” Buchasta makes no future plans, saying that it is best not to have expectations.
Putin’s Triumph
“The first step for businesses from the east is to go to Kyiv, but increasingly they end up in a second phase, moving to the west,” said Tarás Yatsenko, director of the Lviv communication group Tvoe Misto. “But Lviv is saturated, and the next step will be to move to Europe. The situation is a triumph for Vladimir Putin, who is destabilizing the country and draining it of resources.”
While the east lacks opportunities to move forward, the west faces rapid saturation without the necessary infrastructure to cope with the influx. Housing prices are an example: in the Lviv region, the average monthly rent for a one-bedroom apartment is 285 euros, while in industrial centers near the front lines, such as Kharkiv or Kherson, it is 100 and 60 euros, respectively. These figures come from a market study published in January by the real estate portal Dim Ria.
Buchasta’s restaurant is located at Promprylad, a former factory in central Ivano Frankivsk that has become the city’s economic hub. A total of 76 companies are based there, according to Tania Vasilik, director of operations of the foundation that manages Promprylad. Since the start of the war, they have had to expand the space to accommodate companies, from 6,000 to 19,000 square meters. The occupancy rate is full. “An initiative like Promprylad is and will be impossible in Zaporiyia; it is and will be too dangerous,” Buchasta ventured.
“The main problem in Ivano Frankivsk is that the demand for space is much higher than the supply. We are the second city after Kyiv where the most construction is taking place,” Vasilik indicated. Half of the new real estate park is investment from people who do not reside in the municipality. Its population is 240,000.
Vasilik believes that the Ukrainian capital is suffering a population decline of families seeking safe destinations for their children, but not of companies. “My impression is that companies in Kyiv are closing because their owners no longer want to face another displacement,” she said.
“In reality, what is happening is a rebalancing of the Ukrainian industry,” said Fedir Timoshen, director of foreign relations at the Electro Cable Group (ECG), with a touch of irony. This family-owned consortium from Zaporiyia is the largest producer of cables for electronics and telecommunications in Ukraine. In 2022, they moved the ZFNM copper cable factory to Ivano Frankivsk. “The large industry has traditionally been in the east, and when we arrived here, our workers from Zaporiyia had to train the new local employees.”
Timoshen, 43, explained that ZFNM is currently producing only 20% of what it manufactured in Zaporiyia. Its market has changed: before the war, 80% of production was for the domestic market; today, 80% goes to export. The Ukrainian economy is in a downturn and has had to change its objectives. In Zaporiyia, 20 kilometers from the front lines, this would be impossible. “Without electricity and water, we could not operate, and our international customers and suppliers refuse to travel there,” said the ECG executive. Two missiles hit the company’s industrial park in Zaporiyia in 2025. The western regions are also an advantage for exports due to their greater proximity to the borders with the rest of Europe.
The main challenge, Timoshen said, is the lack of qualified personnel. Hundreds of thousands of young people of working age have left Ukraine. Industrial and agricultural companies lament that recruitment is also leaving them without male employees. In the case of ECG, the problem is less because its production is considered strategic, as they supply cables to Ukraine’s energy companies, and these employees are exempt from military service.
Viktoria Glushchak is an executive at MFT, a manufacturer of oral hygiene products that moved its production from Kharkiv to Ivano Frankivsk in 2022. “When the war broke out, we were starting the project of building a new factory in Kharkiv that would be interactive with children and customers, like Willy Wonka’s chocolate factory,” Glushchak explained. MFT, she explained, immediately ruled out moving to Kyiv because, as early as autumn 2022, when the first Russian offensive against the energy sector occurred, they saw that the capital would suffer more than the western regions.
Glushchak is from Ivano Frankivsk and also believes that the economy in the east will be rebuilt in the future. Again, the opinion of a Ukrainian far from the war contrasts with those who have seen it up close. This is the case with the Dudchenko couple. Kostia and Polina left Kherson. This southern city is on the same front line: only the Dnipro River separates the two armies. In Ivano Frankivsk, they have opened four cafes; they had to close the restaurant they had in their hometown two months ago. Constant attacks made it unsustainable to keep it open.
Business is also declining in Ivano Frankivsk, the Dudchenkos say. The economic crisis is felt in customers’ pockets, the problems with electricity, the price of rent… But their new home is paradise compared to Kherson. “The future depends a lot on the agreement that is signed with Russia,” Kostia believes. “But returning to Kherson will be impossible as long as the Russians remain on the other side of the river; the threat will always be there,” Polina added.
