How to accelerate economic recovery in Ukraine?

The government predicts that the national economy, after falling by a third this year, will grow by 5 percent in 2023, even amid the war. How to accelerate Ukraine’s recovery?

Analyzing the government’s forecasts for the next year, Director of the Centre for Economic Strategy Hlib Vyshlinsky noted that the Cabinet of Ministers chose a moderately conservative scenario, respectively, the economic growth rate after a significant drop in 2022 is projected to be very low, which is quite realistic.

“We understand that this year’s forecast depends on a scenario that is only partially under Ukraine’s and its government’s control. Therefore, the spectrum of potential changes in gross domestic product is extremely wide – from rapid growth to decline,” – he said in a comment to UNIAN.

Experts agree that the main drivers of Ukraine’s post-war recovery should be the restoration of infrastructure and development of the military-industrial complex.

Hlib Vyshlinsky pointed out that it is a well-thought-out plan for the reconstruction of the country that will allow millions of citizens who left their homes and fled abroad or to safer regions of Ukraine to return home faster. 

“Faster and greater assistance of international partners will be needed here. One of its directions should be grants for war risk insurance, without the mechanism of such insurance and its mass application it is impossible to restore private investment. And responsible fiscal and monetary policy, which will allow to maintain macro-financial stability under conditions of unstable external financing of the budget deficit,” the expert said.

He also added that the recovery of economic activity now has rather regional variations, which may already cause sectoral discrepancies.

“The only extraterritorial sectors affected are those that are heavily dependent on maritime logistics. Accordingly, this doubles the blow to metallurgy and also poses threats to crop production if the grain corridor is not extended after November.

As for other sectors, the greater growth will be in those sectors that support the Armed Forces, the reconstruction of destroyed buildings, as well as services and consumer demand for “second necessities”, – said Vyshlinsky.