Pathways

to rebuilding Ukraine’s economy

from the present to post-war
Olga Kupets
Kyiv School of Economics (Policy Prof.)
World Bank (STC)
Hitotsubashi University (Visiting scholar)

Soka University
26 January 2023
 Map of Ukraine

Administrative division: 24 oblasts, Crimean Autonomous Republic and 2 cities

with special status (Kyiv and Sevastopol)
Capital city: Kyiv (2.9 mln people, 7.1% of total population) 2
 Basic information about Ukraine & Japan (2021)
Indicator Ukraine Japan
Area 603,550 km2 (of which 7% 377,900 km²
occupied by russia since 2014)
Population 41 mln people (excl. TOT of 125.5 mln
Crimean AR and the city of
Sevastopol)
Urban share 69.7% 92%
Life expectancy 69.8 years 84.8 years
at birth
Share of the 17% 30%
elderly (65+
years)
GDP per capita 4,836 USD (current US$) and 39,285 USD (current
14,220 USD at PPP (current US$) and 42,940 USD at
international $) in 2021, rank 107 PPP (current international
and 112 in the world $)
Human HDI 0.773, rank 78/191 HDI 0.925, rank 19/191
Development
Source: SSSU (2022) Statistical Yearbook of Ukraine 2021; World Development Indicators; UNDP (2022)
Human Development Report 2021-22 3
 Russian-occupied territories of Ukraine in 2022-2023

March 24, 2022 (22-27% of territory) January 23, 2023 (15-17% of territory)

Source: https://www.understandingwar.org/backgrounder/ukraine-conflict-updates; 4
https://www.washingtonpost.com/world/2022/11/21/russia-territory-gains-ukraine-war/
 Outline

 Economic and human costs of the war in Ukraine:

 Economic impacts of the war
 Social impacts of the war
 Assessed damage, losses and recovery needs
 Key steps and reforms to rebuild the Ukraine’s economy
 Ukraine’s National Recovery Plan (presented in July 2022)
 Recommendations of the World Bank and global/Ukrainian
thinkers and researchers
 Key messages to students/ youth

5
1. Economic and human costs of
the war in Ukraine

6
 Economic impacts of the war
Real GDP in Ukraine is projected to decline by 32-35% in 2022.
If so, the Ukrainian economy will contract to 65-68% of the 2010 level.

Quarterly real GDP growth, YoY Annual real GDP index, 2010=100
(%) (%)
10 120
5 100
0
-5 80
-10
-15 60
-20 40
-25
-30 20
-35
-40 0

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022f (DC)
2023f (DC)
Source: SSSU data; 2022f and 2023f (DC) stands for Dragon Capital forecast (
https://dragon-capital.com/ua/media/press-releases/dragon-capital-pogirshiv-pronoz-realnogo-vvp-do--32rr-v
-2022-r-ochikue-padinnya-ekonomiki-na-5-rr-v-2023-r-ta-pomirnu-devalvatsiyu-grivni-do-43-grndol-naprikintsi
-ro/ 7
 Economic impacts of the war
A slight recovery of economic activity observed since spring 2022 has stalled
due to interruptions of electricity supply after russia’s numerous massive
attacks on energy facilities since October 10, 2022.
Power outages have become the most important problem for Ukrainian
business in November 2022, as reported by 78% of respondents (compared
to 4% in September 2022).
Most important problems for Adjustment of companies in Ukraine to
Ukr.business (% of respondents) instable electricity supply

Source: NBU (2023) Monthly Macroeconomic and Monetary Review, January 2023$ IER (2022) Survey of 8
Ukrainian business
 Economic impacts of the war
Other economic impacts of the war include:
• High inflation (26.6% in December 2022, YoY, overall; 34.4% for food,
and 69.4% for transport fuel) which is mainly caused by supply factors
• Substantial devaluation of local currency (from about UAH 29 per USD 1
on Feb 23, 2022 to UAH 40+ in July 2022 – January 2023)
• Widening of budget deficit, which Indicators of Ukraine’s state budget*
is predominantly financed by (bln UAH)
international aid and the purchase
of war bonds by the NBU
• Significant deterioration in the
trade balance of goods due to a
much larger reduction in exports
than in imports
• Job losses (2.4 mln jobs acc. to
ILO) and at least two-fold increase
in the unemployment rate
Source: NBU (2023) Monthly Macroeconomic and Monetary Review, January 2023; ILO (2022)
9
Note: * Dotted and patterned fillings show relevant indicators excluding grants.
 Social impacts of the war
According to IOM, about 5.9 mln people were displaced within
Ukraine (as of December 5, 2022).
12% of them, or 680,000 individuals, have been newly displaced within
the last 30 days, mainly from locations in the East and South of Ukraine.
37% of IDPs have been displaced more than once, of whom about 93,000
people were displaced five times (!).
IOM estimates of IDPs and returnees in Ukraine (million),
March-December 2022
6,477,723.

7,138,715.

7,707,000.
2,775,000.

8,029,000.
2,715,000.

7,134,000.
4,481,000.

6,275,000.
5,547,000.

6,645,000.
5,545,000.

6,975,000.
6,013,000.

6,243,000.
6,036,000.

6,540,000.
5,937,000.

5,914,000.
5,236,000.
000

000

000
000

000
000

000
000

000
000

000
000

000
000

000
000

000
000

000
000
R2 (24 March-1 Aprril)

R9 (17-27 September)

R10 (17-27 October)

R4 (29 April-3 May)

R8 (17-23 August)
R1 (9-16 March)

R6 (17-23 June)
R3 (11-17 April)

R5 (17-23 May)

R7 (17-23 July)

R11 (25 November-

5 December)
IDPs Returnees (including from abroad)
10
Source: IOM (2022), based on 11 rounds of the General Population Survey.
 Social impacts of the war
According to UNHCR, 7,976,980 individual refugees from Ukraine are
recorded across Europe (as of January 17, 2023). 4,885,650 refugees from
Ukraine have registered for temporary protection or similar national
protection schemes in Europe.
The total number of refugees from Ukraine outside Europe is unknown.
Refugees from Ukraine recorder by country
according to UNHCR, January 2023

Source: 11
https://data.unhcr.org/en/situations/ukraine#_ga=2.109171717.1899874530.1671013829-1817535141.1671
 Social impacts of the war
Other social impacts of the war include:
• Direct population losses: 7,068 civilian deaths, of them 438 were children, as
reported by OHCHR on January 23, 2023; but the real numbers are much higher
• Increasing poverty, with some scenarios envisaging its growth from 2% in 2021
(based on the upper-middle-income poverty line of US$5.5 per person per day) to
21-40% in 2022 and to nearly 60% in 2023
• Deteriorating physical health of population associated with suboptimal living
conditions (e.g. long-term stay in cold non-ventilated shelters, or living in non-
residential buildings used as reception centers for IDPs), wartime nutritional
deficiencies, missed episodes of care (screening, diagnostic, and follow-up) and
treatment for acute conditions, missed immunizations of children and adults, etc.
IN ADDITION to direct losses from injuries and accidents for civilians and the military
• Deterioration of children’s mental health with negative effects on school
performance, and deterioration of adults’ mental health with negative effects on
labor productivity and well-being
• Severe learning losses due to disruptions in the learning process (destroyed
education infrastructure; teachers as IDPs/ refugees or soldiers; lost instructional
time, especially during prolonged breaks due to air raids and power outages in
Ukraine; double burden for Ukrainian schoolchildren abroad)
12
Source: OHCHR (2023); World Bank (2022)
 Estimated damage, losses and needs acc. to WB
Total damage, losses, and needs by sector as of June 1, 2022 (bln. USD)
Sector Damage Losses Total recovery needs Immediate Medium-long
short-term needs term needs
Total 97.4 252 348.4 104.7 243.7
Social sectors 45.3 44 119.1 46.8 72.4
Housing 39.2 13.3 69 33.1 35.9
Education 3.4 0.5 9.2 2.8 6.5
Health 1.4 6.4 15.1 1.2 13.9
Social protection and
livelihoods 0.2 4.5 20.6 8.1 12.5
Culture and tourism 1.1 19.3 5.2 1.6 3.6
Productive sectors 12.13 84 55 23.02 32
Agriculture 2.2 28.3 18.7 10 8.7
Irrigation and water resources 0.2 0.1 7.5 0.02 7.5
Commerce and industry 9.7 47.5 20.8 6.6 14.2
Finance and banking 0.03 8.1 8 6.4 1.6
Infrastructure sectors 37.2 49.5 98.6 22.9 75.9
Energy and extractives 3 11.7 10.4 7.3 3.1
Infrastructure 29.9 26.1 73.8 8.9 65
Telecommunications and
digital 0.7 0.6 3.3 1.3 2
Water supply and sanitation 1.3 6.8 5.4 3.5 1.9
Municipal services 2.3 4.3 5.7 1.9 3.9
Cross-cutting sectors 2.7 74.13 75.3 11.98 63.4
Environment, natural
resources management and
forestry 2.5 0.7 1.2 0.4 0.9
Emergency response and civil
protection 0.1 0.2 0.7 0.5 0.2
Justice and public
administration 0.1 0.03 0.2 0.08 0.1 13
Source : World Bank (2022)
Land decontamination - 73.2 73.2 11 62.2
 Estimated damage according to KSE
As of December 2022, the total amount of documented damage to residential
and non-residential real estate, and other infrastructure amounted to $137.8
billion (at replacement cost). Compared to the latest estimates as of November
2022, the total amount of damage has increased by almost $2 billion.
Damage by type of property as of Number of damaged/destroyed
December, 2022 (%) objects as of December, 2022
Residential buildings
Infrastructure
Industrial enterprise assests

1%
1%
2%2% Education
2%2%
5% Energy sector

5% Agriculture and land resources

39% Transport
6%
Trade (Commerce)
Utilities
9% Culture, tourism, sports
Healthcare
Administrative buildings
26%
Digital infrastructure
Social sphere
Financial sector

14
Source: KSE (2023)
 Estimated damage according to KSE
• Damage to the energy sector is increasing (from USD 3.6 bln in August
to USD 6.8 bln in November-December 2022) and difficult to estimate:
• As of September 1, 2022, more than 10 thermal power plants (TPP) were
completely destroyed or damaged; the largest nuclear power plant in Europe
— Zaporizhzhya NPP — is located in the occupied territory; 18% of solar
generation was located in the occupied territories of Kherson and 6% was
damaged or destroyed; about 80% of wind generation was located in the
occupied territories and part of it was damaged by shelling; 3.5% of bioenergy
facilities were under occupation and at least 4 plants have been destroyed.
• As of November 2022, 592 heat supply facilities were damaged in Ukraine as a
result of russian missile attacks, almost 300 of them have already been
restored.
• Substantial environmental losses (est. at USD 14 billion): irreparable
damages to natural ecosystems and unique natural objects (soils, forests, lakes,
natural resources of flora and fauna in some areas); air pollution and serious
contamination of ground and surface waters as a result of prolonged active
hostilities as well as destruction of chemical enterprises or sudden closures of coal
mines; threat to nuclear and radiation safety
• Approximately 30% of the territory of Ukraine could potentially be contaminated
by mines and other explosive objects.
15
Source: KSE (2022, 2023)
 2. Key steps and reforms to
rebuild the Ukraine’s economy

16
 Ukraine’s National Recovery Plan

In early July, during the Ukraine Recovery Conference in Lugano

(Switzerland), the Ukrainian government presented the draft of the
Ukraine’s National Recovery Plan which outlines a road map for rebuilding
and modernizing the country with total funding needs of over USD 750 bln.
during 2022-2032.

The primary objectives outlined in the Plan are:

• Resilience: Provide economic, social and environmental resilience in the
marathon to victory
• Recovery: Find efficient solutions for the soonest recovery of the crucial
economic and social processes, and natural ecosystems
• Modernization and growth: Develop a modernization plan to ensure
sustainable economic growth and well-being of the people

17
Source: National Recovery Council (2022), https://www.urc2022.com/urc2022-recovery-plan
 Ukraine’s National Recovery Plan: key principles
Principles Comments
Start now, Start recovery initiatives ASAP to build resilience and agility
ramp up for the economy to function under continuous security
gradually threats and provide the foundation to win the war.
Plan for gradual ramp-up of activities, with gradual increase
of risk appetite
Grow prosperity Objective of the plan is to ensure GDP growth and equitable
in equitable way distribution of wealth
Integrate into EU Overarching strategic imperative defining the institutional
and regulatory framework. Integration of Ukrainian economy
into European value chains, incl. “green” ones, and
knowledge/information networks
Build back better Build back for better quality and more advanced and
(for the future) sustainable technologies than the damaged/destroyed
assets.
Align Ukraine's recovery and modernization with EU
principles: Green Transition and Digital Transformation
Enable private Recovery should enable Ukraine’s private investment and
investment & boost nation-wide entrepreneurship
18
entrepreneurship
Source : (2022)
Ukraine’s National Recovery Plan: National programs
To boost Ukraine’s recovery and achieve growth targets during 3 periods –
“War time economy” (2022), “Post-war recovery” (2023-2025), and “New
economy” (2026-2032) – the NRP identifies 15 national programs:
1. Strengthen defense and security
2. Strive for EU integration
3. Re-build clean and safe environment and ensure sustainable
development in line with the EU Green Deal
4. Strengthen integrated energy system resilience
5. Boost business environment
6. Ensure competitive access to funding
7. Secure macro-financial stability
8. Grow value adding sectors of the economy
9. Strengthen interconnectivity of Ukraine by upgrading logistics
10. Modernize local infrastructure, municipal services and housing
11. Modernize social infrastructure
12. Improve the education system
13. Upgrade the healthcare system
14. Develop the culture and sport system
19
15. Secure targeted and effective social policy
 How to build back better?
Beyond the guiding principles that the government’s National Recovery
Plan establishes, the World Bank (2002) suggests considering the
following principles based on international experience related to post-
conflict and post-disaster recovery and reconstruction:
• Balancing urgent needs and medium- to long-term goals
• Strategic prioritization of reconstruction across all sectors
• Inclusiveness and equity
• Transparency and good governance
• Addressing needs of different (groups of) oblasts of Ukraine
such as frontline, recovered, backline, and support areas
• Resilience and building back better
• Leadership and coordination
• Local solutions and local development
• Focus on community needs

20
Source: World Bank (2022)
 How to build back better?
“Reconstruction is not about rebuilding Ukraine to the pre-war
state, it is about a deep modernization of the country.
Infrastructure, technology, business environment, institutions, education,
healthcare and other critical elements of the economy and society will have
to undergo reforms to help Ukraine escape the post-Soviet legacy and
become
 a full-fledged democracy with
 a modern economy,
 strong institutions, and
 powerful defense sector.
… These four factors are deeply intertwined. Neither democracy nor a
strong economy is possible without institutions (e.g. a law enforcement
system). A strong economy is needed to support a strong army so that the
choice between ‘guns and butter’ is not as stark as it is today in Ukraine.
And the army is needed to protect assets and people and thus encourage
investment. This calls for a comprehensive, deep modernisation of the
country.”
21
(CEPR, 2022, Introduction, p.2-9).
 How to build back better?
The content of the CEPR (2022) book outlines the main areas for reforms:
1. Ukraine’s EU integration
2. Ukraine’s post-war reconstruction and governance reforms
3. Anti-corruption policies in the reconstruction of Ukraine
4. Ukraine’s business environment
5. International trade and foreign direct investment
6. The reconstruction and development of Ukraine’s financial sector
after the war
7. Rebuilding Ukraine’s energy sector: Challenges and Opportunities
8. Rebuilding Ukrainian transport infrastructure
9. Accelerating urban economic growth in Ukraine
10. The labor market in Ukraine: Rebuild better
11. Education reforms during and after the war
12. The health system
13. Transforming Ukraine’s research and development to become a
driving force of reconstruction
14. How to organize aid 22
 Japan stands with Ukraine
In response to russia’s aggression against Ukraine,
the Government of Japan is taking the following measures in support of
Ukraine:
• Provision of drones, bulletproof vests, helmets, winter battle dress uniform,
tents, cameras, hygiene products, emergency rations, binoculars, lighting
devices, medical supply, civilian vehicles (van) and others;
• Emergency humanitarian assistance to Ukraine and neighboring countries
(health and medical care, food, protection): USD 200 mln + USD 500 mln
• Support for promotion of grain exports from Ukraine: USD 17 mln
• Assistance for transportation to and distribution in Somalia of wheat
donated by the Ukrainian government: USD 14 mln
• Financial support of Ukraine: USD 600 mln
• Provision of generators and solar lanterns as winterization support through
international organization: USD 2.57 mln
• Visa extensions to Ukrainian residents in Japan + acceptance of evacuees
from Ukraine into Japan
• In-kind contributions and air-lifting of UNHCR’s humanitarian relief items by
JSDF aircraft as well as personnel contribution in the fields of medical care,
health, etc. to assist evacuees 23
Source: The Government of Japan (2022) Japan stands with Ukraine, 14 December 2022,
https://japan.kantei.go.jp/ongoingtopics/pdf/jp_stands_with_ukraine_eng.pdf
 Key messages to students/ youth
 Study hard with a focus not
only on hard skills but also
on soft skills (critical
thinking, communication in
English/foreign language,
empathy, flexibility,
adaptability, etc.)
 Empower women: ”If women
ruled the world, there would
be no wars”
 Let younger voices lead
(through youth civic
engagement)
 Stand with Ukraine: ”You don’t need to be Ukrainians to
support Ukraine. It’s enough to be humans” (O. Matviichuk,
Nobel Peace Prize winner 2022) 24
 References (1)
• Institute of Economic Research and Policy Consulting (2022) New monthly survey
of companies. Edition 7 (November 2022). Ukrainian business during a war. [in
Ukrainian]
• ILO (2022) ILO Monitor on the world of work. Tenth edition Multiple crises
threaten the global labour market recovery, 31 October 2022.
• IOM (2022) Ukraine — Internal Displacement Report — General Population Survey
Round 1 (16 March 2022)
• IOM (2022) Ukraine — Internal Displacement Report — General Population Survey
Round 11 (25 November - 5 December 2022)
• National Bank of Ukraine (NBU) (2023) Monthly Macroeconomic and Monetary
Review — January 2023,
https://bank.gov.ua/en/news/all/makroekonomichniy-ta-monetarniy-oglyad-sichen
-2023-roku

• Office of the High Commissioner For Human Rights (OHCHR) Ukraine: Civilian
casualty update 23 January 2023,
https://www.ohchr.org/en/news/2023/01/ukraine-civilian-casualty-update-23-janu
ary-2023

• State Statistics Service of Ukraine (SSSU) (2022) Statistical Yearbook of Ukraine

2021 25
 References (2)
• Centre for Economic Policy Research (CEPR) (2022) Rebuilding Ukraine:
Principles and policies, ed. by Y. Gorodnichenko, I. Sologoub, and B. Weder di
Mauro
• Kyiv School of Economics (2022) Assessment of damages in Ukraine due to
Russia's military aggression as of September 1, 2022 ,
https://kse.ua/wp-content/uploads/2022/10/ENG-Sep22_Working_Sep1_Dam
ages-Report.docx.pdf
• Kyiv School of Economics (2023) “The total amount of damage caused to
Ukraine’s infrastructure due to the war has increased to almost $138 billion”,
24 January,
https://kse.ua/about-the-school/news/the-total-amount-of-damage-caused-to-
ukraine-s-infrastructure-due-to-the-war-has-increased-to-almost-138-billion

• National Recovery Council (2022), Ukraine’s National Recovery Plan, July

2022, https://www.urc2022.com/urc2022-recovery-plan
• World Bank (2022) Ukraine Rapid Damage and Needs Assessment, August
2022

26
Thank you for attention!

kupets@kse.org.ua 27