Rebuilding in Ukraine can provide significant benefits to the local economy.
Ukraine has the potential for significant growth in its economy, according to a recent study. The rebuilding process must include a green and digital transformation. By doing so, the country can experience an "economic leap" and create "advanced sectors with higher value creation," according to the Vienna Institute for International Economic Comparisons (wiiw) and the Bertelsmann Foundation.
Six areas of particular interest for Ukraine's rebuilding include renewable energy, rare raw materials, metal processing, machinery manufacturing, food industry, and IT. To succeed in these areas, the country needs institutional reforms in rule of law and corruption fighting. These reforms, along with industrial policy and strategies to attract foreign direct investment, are crucial for the economic reconstruction.
The IT sector of Ukraine is cited as an encouraging example. It has proven to be resilient despite the ongoing conflict. "In the last ten years, the IT sector has developed into one of the most dynamic sectors in Ukraine, with solid export-oriented growth and an estimated share of approximately four percent of total economic output in 2021," said Olga Pindyuk, Ukraine expert at wiiw.
The experts suggest that the European Union (EU) closely monitor and support Ukraine's economic development. By including the country early in EU initiatives related to foreign trade, climate policy, the digital sector, and infrastructure, the EU can aid Ukraine's economic progress. "It would be beneficial for permanent trade facilitations to be established," they stated. However, protectionist sentiments, like those seen in the agricultural sector, should be avoided.
The EU has temporarily exempted Ukrainian agricultural products from import restrictions due to the Russian invasion and blockade of Black Sea ports.
