CEE Special Report: Rebuild Ukraine
CEE Economies Special Report , 24. Feb.
Three years ago Russia invaded Ukraine. In the following analysis, that builds upon previous versions of the reports on rebuilding Ukraine. As the possibility of a peace deal between Ukraine and Russia recently made headlines, we would like offer a more detailed look at macroeconomic development in the region (the impact of the war and economic potential). We believe that the sustainability of the peace deal would be crucial for the stability of Ukraine, the region, as well as economic prospects. Strong guarantees will be needed to see the full economic benefits. The economies expanded, but inflation was unprecedented. Further, the war forced Europe to diversify its energy sources as well as to alter trade flows (sancitons on Russia). Finally, the region has experienced a massive inflow of Ukrainian refugees since the outbreak of the war.
Europe needs to increase defense spending. Last but not least, we see the deepening of integration (NATO enlargment, granting of candidate status for EU membership to Ukraine). EU accession has a long way to go, however. Ukraine’s path to EU membership will demand substantial political, economic and structural adjustments from both Ukraine and the EU. Ukraine lags behind in governance indicators and control of corruption seems to be the biggest drag at this point.
Europe needs to increase defense spending. Last but not least, we see the deepening of integration (NATO enlargment, granting of candidate status for EU membership to Ukraine). EU accession has a long way to go, however. Ukraine’s path to EU membership will demand substantial political, economic and structural adjustments from both Ukraine and the EU. Ukraine lags behind in governance indicators and control of corruption seems to be the biggest drag at this point.