Many Ukrainian financial experts stepped forward this week to warn about the negative impact of the martial law that was introduced in ten regions, Kyiv-based brokerage Concorde Capital said on a note on December 6. Some experts says martial law could cut as much as 3% off Ukraine’s economic growth, which would stop the current economic recovery in its tracks.

On November 26, Ukraine's parliament, the Verkhovna Rada, greenlighted the introduction of martial law in a number of regions of Ukraine for a period of 30 days from November 28 by the nation's President Petro Poroshenko following a dramatic escalation of a Ukraine-Russia conflict in the Azov Sea.

According to Poroshenko’s media office, martial law was introduced in the Vinnytsia, Luhansk, Donetsk, Zaporizhzhia, Mykolaiv, Odesa, Sumy, Kharkiv, Chernihiv, Kherson regions, as well as the internal waters of the Azov-Kerch water area.

Specifically, Mykhaylo Kukhar, the director of the Independent Macroeconomic Analysis Group, believes that martial law will shave three percentage points off Ukraine’s 2019 GDP growth to about 3% year-on-year.

Several foreign companies have already postponed their investment plans in Ukraine for 2019, he said. In particular, Ukraine could lose $100mn-$200mn in investment per month, estimated Oleg Ustenko, the executive director of the Bleyzer Foundation. Such losses will place devaluation pressure on the hryvnia, he said.

Alex Danylyuk, the former finance minister, agreed on December 4 that devaluation pressures will increase, adding that martial law threatens the fulfillment of the large-scale privatisation of state enterprises that has been planned. "In considering the 2019 budget, it’s necessary to review privatization revenues. It’s guaranteed we’ll gain none at all," he told the Novoe Vremia magazine.

Introducing martial law doesn’t resolve any of Ukraine’s key problems, said Volodymyr Fedorin, a co-founder of the Bendukidze Free Market Center in Kyiv. "Refusing to uphold basic rights and freedoms, even in words, certainly won’t make Ukraine attractive for investors," he told Novoe Vremia. “It will be much easier for Putin to take a starving, poor Ukraine, stripped of its prospects and reeling from the flight of its most active citizens."

Among Ukraine’s first business leaders to point out the economic losses from martial law being introduced was Concorde's CEO Igor Mazepa. He believes that estimated economic losses as high as $500mn, a large amount considering Ukraine’s 2017 GDP was about $112bn.

Among the consequences, "it will all lead to money outflow from the banking system, where it would have multiplied and create added value for the economy," he wrote in an oped published by the Ukrainska Pravda online outlet..

Earlier, the International Monetary Fund (IMF) said that there are no legal restrictions to further cooperation with Ukraine over a new $3.9bn Stand By Agreement (SBA) with the IMF in October after the introduction of martial law.

"We are following recent developments, including the imposition of martial law, and hope for the prompt de-escalation of the current situation," Resident Representative in Ukraine Goesta Ljungman said in Kyiv on November 26. "The IMF does not have any legal restriction to the continuation of cooperation with Ukraine in this situation."