Ukraine Overview: Development news, research, data

Overview

UKRAINE	2023
Population, million	39.4
GDP, current $ billion	150.6
GDP per capita, current $	3820.8
Life Expectancy at Birth, years	69.6

Now in its third year of war, Russia’s invasion of Ukraine continues to cause staggering losses to people and the economy. The war has also had devastating repercussions for the global economy, which is struggling in the face of steep interest rates, record-high debt levels, and escalating fragility and conflict.

Ukraine Remains Resilient

The pace of recovery in Ukraine is projected to slow to 3.2% this year from 4.8% in 2023, reflecting a smaller harvest and a persistent labor shortage. The country’s economic outlook remains conditional on donor support.

Our latest figures show that poverty in Ukraine has increased by at least 1.8 million people since the start of the war. More than 9 million Ukrainians are now living in poverty. We estimate that an additional 3 million more people would be poor if international partners had not stepped up to provide resources.

While many more people are suffering, the government and the people of Ukraine continue to show remarkable resilience in the face of devastation.

The government has maintained public service delivery, protecting human capital despite the war. Ukrainians are sending kids to school, keeping businesses running, and providing critical health services.  According to World Bank surveys (see Listening to People survey and Business survey) as well as data from the Third Rapid Damage and Needs Assessment (RDNA3):

Social support to vulnerable households is essential:63% of households receive social benefits (old-age pensions, social assistance or payments for internally-displaced persons.) Social benefits account for 73% of income for the poorest 30%. Only 22% of adults employed before the war are working.
Public services continue. 89% of teachers and health workers are paid without disruption.
Schools are open. At least 89% of 6-18 year-olds are enrolled in school and receiving lessons through in-person, remote or blended learning, including in the regions under hostilities.
Health centers provide care. 91% of health centers are open and satisfaction with quality of care is high.
Companies are adapting by adjusting their product mix, embracing ITC use or relocating internally. International firms remain committed to working in Ukraine.
In the last year (2023) the Government of Ukraine, with the support of its partners, has met some of the most urgent needs, according to government data. For example:
- $1 billion was disbursed toward housing sector, with most being dedicated to the repair and reconstruction of damaged buildings.
- More than 2,000 km of emergency repairs were made on motorways, highways, and other national roads.
- Local authorities rebuilt approximately 500 educational institutions and the share of educational institutions with bomb shelters increased from 68% to 80%.

Ukraine’s Needs

The Rapid Damage and Needs Assessment (RDNA3), released in February 2024, estimates that the cost of reconstruction and recovery stands at $486 billion over the next decade, and combines both needs for public and private funds. The highest estimated needs are in housing (17%), transport (15%), commerce and industry (14%), agriculture (12%), energy (10%), social protection and livelihoods (9%), and explosive hazard management (7%). 

Ukraine’s financing needs are immense.

Reforms and policies that catalyze private sector investment and prioritize an inclusive and green recovery, as well as integrating priority setting and project planning into the medium-term budget planning process, are critical to Ukraine’s successful recovery.

Ukraine is taking much more ownership of its own future and is pursuing reforms to grow the economy, attract private sector investment, and increase tax revenues.

Last Updated: Aug 01, 2024

Donor Support

As of August 2024, the World Bank has mobilized $47 billion in commitments and pledges to be channeled through Bank projects, with most of this money disbursed to sustain public services, repair infrastructure and support agriculture. More than 90% of this mobilized capital comes from donor countries.

These commitments and pledges leverage innovative instruments, such as IBRD and IDA loans, IBRD loans guaranteed by partners, donor grants and equity, IFC blended finance and MIGA guarantees.

Donor resources have been essential for Ukraine to sustain public services and undertake essential repairs to housing and infrastructure. Without this support, many more people would have fallen into poverty.

Providing adequate budget support to keep the government running and to provide essential services has been critical over the last two years. It helped the government meet the basic needs of its citizens like paying pensions to the elderly, keeping hospitals open, and keeping kids in schools. This support has reached 15 million Ukrainians.

Mobilized resources are reaching:

10 million pensioners, and wages for 500,000 education employees, 145,000 government employees, and 56,000 first responders
More than 530 hospitals received emergency medical equipment and supplies, and 2,431 health service providers stayed open in 2022
12,817 schools remained open in 2022 through a combination of in-person, remote, and blended learning
3+ million vaccines delivered to children under 7 since March 1, 2022
800,000+ additional persons received medicines and/or medical products subsidized through the Affordable Medicines Program since March 1, 2022
2,800+ healthcare providers completed training to care for victims of gender-based violence since the end of 2022
55,000+ people accessing mental health services since November 1, 2022   
160,000+ people accessing rehabilitation services for mental and physical trauma since November 1, 2022
Nearly 55,000 families benefited from compensation to make emergency repairs to their homes
We are also helping Ukraine restore its transport network—which was disrupted in more than 21,000 villages, 51 towns, and 35 cities—by repairing bridges and railways to relink communities, support immediate humanitarian relief and recovery, and increase capacity of import and export corridors
More than 80,000 small farmers are receiving grants and more than 12,000 agricultural producers are receiving subsidized loans to ensure farms remain active. These funds are also leveraging commercial financing in the agri-food sector; as of July 1, 2024, private capital mobilization totaled $2 billion.

The World Bank’s Role

The World Bank brings strong oversight practices and expertise in reconstruction, particularly in agriculture, energy, infrastructure/transport and social sectors, as well as global experience in supporting development-oriented reforms.  We routinely monitor our Ukraine portfolio for evidence of fraud and corruption and have robust mechanisms in place to swiftly deal with any reports.

The World Bank primarily works in areas where others are not present such as in Ukraine’s social sectors including health,  social protection, and soon in education.

The World Bank has expanded existing projects, established multi-donor trust funds, and channeled guarantees and parallel financing from donor countries.

The World Bank supports Ukraine, in close collaboration with bilateral and other MDBs, including the IMF and EU (on reforms), EBRD and EIB (on investment). The World Bank and other MDBs are harmonizing procurement practices in Ukraine.

The World Bank Group (IBRD, IFC and MIGA) is also working with the Ukrainian government and partners to identify opportunities for private financing of Ukraine’s reconstruction. If the right conditions are created, we estimate that as much as one-third of Ukraine's future needs could be met with private sector financing.

In the first three quarters of 2023, over $4 billion in foreign direct investment flowed into Ukraine, which shows that foreign investors see good opportunities.

The World Bank is advising the government’s “Ukraine Plan” that identifies critical reforms and investments over the next years and helps to prepare the country for EU accession.

The World Bank Operations [Projects]

WB Operations

PEACE

Since the start of Russia’s invasion, donor support has been deployed through the World Bank’s project Public Expenditures for Administrative Capacity Enhancement (PEACE) to help the Government of Ukraine meet urgent needs, including the provision of core public services such as health, education, and social protection. This support has reached 15 million Ukrainians, and is helping to provide wages for government and school employees, pensions for the elderly, salaries for public servants, and social programs for the vulnerable.  The World Bank has deployed a range of mechanisms designed to monitor service delivery and check for fraud and corruption.

PEACE is widely viewed as having helped the government survive the war by sustaining its capacity to deliver essential public services.

Framework Projects

To respond to priority needs, the World Bank has introduced Framework Projects to support recovery and build capacity for reconstruction in health, energy, transport, housing and agriculture. These are World Bank-supported emergency operations that mobilize partner resources through an innovative and flexible design that allows funds to be disbursed quickly, can be scaled as necessary, and can absorb additional financing as it becomes available. They include appropriate fiduciary, environmental and social safeguards. IBRD funding for these projects is secured thanks to the bilateral guarantees provided by development partners.

The Bank is also supporting investment operations to respond to the ongoing attacks on critical infrastructure—including financing to (i) build resilience into the power sector to help withstand Russian attacks, reorient transportation links to support exports and maintain humanitarian routes, and repair housing damaged by missile attacks; and (ii) to support economic recovery—including, under a recently approved project, by restoring agriculture production by helping more than 90,000 farmers access affordable loans and receive grants for agricultural production, and to strengthen the social safety net.

URTF

To swiftly mobilize efforts for reconstruction, the World Bank has established the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF), a multi-donor fund to channel grant contributions from donor partners. The URTF’s objectives are to help sustain the country’s administrative and service delivery capacity, and conduct relief efforts, as well as to support the planning and implementation of Ukraine’s recovery, resilient reconstruction, and reform agenda.

The URTF supports the World Bank’s Framework Projects and ensures that Ukrainian authorities can quickly and effectively utilize these critical investments and leverage the multiple sources of financing efficiently and at scale. 

MRII

The World Bank Group’s Multi-Donor Resources for Institutions and Infrastructure (MRII - МРІЇ) for Ukraine is a facility established to support Ukraine through a coordinated approach among the World Bank, IFC, and MIGA. The MRII takes a phased and multi-pronged approach to mobilizing financing and coordinating sources of support through guarantees, co- and-parallel financing, and other financial instruments. All MRII instruments allow donors to help Ukraine in addressing its immediate needs to sustain key public services, the private sector, and wider recovery and reconstruction needs identified in the RDNA.

The World Bank Group’s Multi-Donor Resources for Institutions and Infrastructure (MRII - МРІЇ) for Ukraine is a facility established to support Ukraine through a coordinated approach among the World Bank, IFC, and MIGA. The MRII takes a phased and multi-pronged approach to mobilizing financing and coordinating sources of support through guarantees, co- and-parallel financing, and other financial instruments. All MRII instruments allow donors to help Ukraine in addressing its immediate needs to sustain key public services, the private sector, and wider recovery and reconstruction needs identified in the RDNA2.

IFC

IFC launched a $2 billion Economic Resilience Action program to support Ukraine's private sector during Russia’s invasion. Since February 2022, IFC has delivered $1.1 billion in short- and long-term finance in Ukraine, including $665 million OA and $417 million mobilization to bolster Ukrainian agriculture, financial and technology sectors, help implement urgent repairs in the residential sector and support municipalities hosting IDPs. This includes $336 million in guarantees to support critical exports and imports of grains and other staples, $212 million in support for agribusiness, and $70 million for the tech sector. It also includes €50 million in risk-sharing facilities to help Ukrainian financial institutions expand lending to smaller businesses, including farmers and women-owned SMEs. In addition to financial support, the IFC’s program includes analytical work, advisory services, and pre-investment projects to enable private investment in Ukraine’s reconstruction.

MIGA

MIGA has issued more than $215 million in political risk insurance guarantees to Ukraine since the war began. To address the shortage of insurance capacity for war risk, MIGA has established a trust fund that was seed-funded by Japan. This and future donor contributions, combined with MIGA’s own capital, will help mobilize public and private reinsurance in support of projects in the energy, agribusiness, manufacturing, and logistics sectors. MIGA also is partnering with EBRD to support short-term trade finance guarantees for Ukraine to serve humanitarian needs and help keep industries like agriculture going while providing critical imports needed for production.

MIGA expects the SURE Trust Fund, which was established with Japan’s critical anchor contribution of $23 million, to grow to $300 million through contributions from additional donors. Japan has contributed an additional $2 million, Norway has contributed $22 million, the United Kingdom £20 million, and Belgium €1 million.

Partners

Donor governments: Austria, Belgium, Canada, Denmark, Finland, Germany, Iceland, Indonesia, Ireland, Italy, Japan, the Republic of Korea, Latvia, Lithuania, the Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

IFIs: EIB, EBRD, EC, IMF, CEB

Learn more: World Bank Financing Support to Ukraine

Last Updated: Aug 01, 2024

Recent Economic Developments

More reliable electricity, an exceptional harvest and steadier receipt of external assistance have allowed for the first GDP expansion in Ukraine since February 2022, with year-on-year growth of 19.5% and 9.3% in Q2 and Q3 of 2023, respectively. Yearly growth for 2023 was 5.3%.

Inflation has declined from 26.6% at end-2022 to only 4.3% in February 2024, with a restrictive monetary policy stance and conducive food supply contributing to this reduction. In October 2023, the National Bank of Ukraine (NBU) transitioned from a pegged to a slightly more flexible exchange rate regime, which has resulted in modest currency depreciation. Banks have remained profitable and stable, but risks are prevalent.

After recording a surplus in 2022, Ukraine’s current account turned into $9.6 billion deficit in 2023. This was driven by a widening trade deficit and the replacement of grant receipts by loans. Reserves were aided by external assistance and stood at $37.1 billion on March 1, 2024. Higher needs for defense expenditure necessitated a significant revision of the 2023 budget and an expansion of the fiscal deficit, which reached an estimated 27% of GDP when excluding grants. Ukraine met its financing needs through domestic bank borrowing and external assistance but has not resorted to monetization in 2023.

Economic Outlook

Ukraine’s economic outlook is conditional on the timing and quantity of external assistance receipts and the assumed duration of Russia’s invasion. Under an indicative scenario that assumes active hostilities will continue throughout 2024, GDP is expected to expand modestly by 3.2% this year.

Starting from 2025, Ukraine’s economic growth would accelerate to 6.5% under the baseline assumption as export growth resumes, and reconstruction investment supports the demand side. Private consumption growth is projected to remain modest due to contractionary monetary policy needed to reign in post-war inflation. Inflation is expected to pick up in 2024 as one-off factors subside but is projected to decrease from 2025.

The current account is expected to widen to 7.8% of GDP deficit in 2024 and remain elevated under the baseline assumption, as a reduction in grants outweighs a gradually decreasing trade deficit from 2025 onwards. The fiscal deficit (excluding grants) is projected at 20.4% of GDP in 2024 before gradually declining to 6.5% by 2026, and is projected to be financed by external assistance, with an increasing contribution from domestic sources over time.

Public and publicly guaranteed debt is projected to stabilize around 98% of GDP in the medium-term. This scenario is subject to significant downside risks due to the vulnerability of Ukraine’s economic trajectory to external financing shortfalls and the possible prolongation of the active hostilities beyond 2024. Should downside risks materialize, a more stringent macroeconomic adjustment could become necessary.

Last Updated: Apr 15, 2024