SCENARIO BASED MACRO ASSESSMENTS OF THE POST-WAR RECOVERY OF UKRAINE'S ECONOMY

Abstract

The article outlines the long-term trends in the development of the world economy against the background of the sharp deterioration in the conditions of global growth, primarily due to the ongoing war in Ukraine, persisting inflation and tightening financial conditions. A special place is given to the main task of the post-war reconstruction of Ukraine’s economy, which is the transition from the pre-war commodity-agrarian, and import-dependent economy and ensuring economic recovery based on modern achievements in science, technology and the new technological order. Completing the task includes the restoration of infrastructure, restructuring the economic sectors and activities that should become drivers for the recovery of Ukraine's economy in the near future (defense-industrial complex, agricultural sector, construction, ICT sector, and mechanical engineering), preservation of human capital, etc. The authors note that in 2022, a significant drop in output in all economic activities is expected, which will persist until the end of hostilities. Construction, whose activities will be limited to the restoration of destroyed critical infrastructure, and industry, which accounted for the lion's share of Ukraine's pre-war industrial production (mining, metallurgy, energy), will experience the biggest decline. The starting conditions of the forecast estimates of Ukraine's post-war recovery are identified, such as investment attraction, a high rate of accumulation of fixed capital to provide a shorter period of economic recovery, and achieving a moderate inflation. Calculations show that attaining the rate of gross accumulation of fixed capital up to 30-35% of GDP would contribute to a rapid recovery of Ukraine's economy after the war. It is shown that the main factors of the decrease in merchandise exports during the war are the drop in output and the erosion of this country’s transport and logistics potential. An assessment is made of the value and physical volumes, as well as the commodity and geographical structure of merchandise exports from Ukraine in 2022. The authors also provide an assessment of the impact of the reduced physical volume of merchandise exports on output, value added and labor wages in Ukraine. The risks of ensuring the post-war recovery of Ukraine's economy are identified, the main of which are the continuation of the military aggression by the Russian Federation after 2023 and the escalation of hostilities on the territory of Ukraine with a strengthening impact of destructive shocks from the global recession on this country’s domestic economic processes.