How Ukraine to revive economy after war. NBU’s view

Author

Maksim Nechiporenko

The hostilities are still far from over, but discussions are already underway about how the revival of the Ukrainian economy, infrastructure, and buildings will proceed, and how enterprises will resume their work after the deliverance from the Russian occupiers.

"Given the unprecedented support that we now have in the West, I think that filling the funds for reviving the Ukrainian economy is quite a realistic task," the press service quotes NBU Deputy Head Serhiy Nikolaychuk.

He clarifies that as the situation stabilizes, work will be done with businesses that have suffered losses. In economic recovery, emphasis will be placed on maximum adaptability in the face of new geopolitical and geocultural realities.

"We are now seeing how Western business is leaving Russia, we are seeing that no one wants to deal with Russia. These are great opportunities for the Ukrainian economy in the post-war period. Because I am sure that many Western businesses will want to stay in this region, but not in Moscow, but in Kyiv," Nikolaychuk notes.

How NBU manages to hold Ukrainian economy

The National Bank is now engaged in ensuring the smooth operation of the financial system.

"Before the war, we stated that our banking system is in good financial shape and is able to withstand various challenges. Of course, the challenges we are living in now are unprecedented, but it looks like the banking system was prepared even for them," Nikolaychuk believes.

He clarifies that the war came to the land of Ukraine not at the end of February 2022, but back in 2014. For eight years of war, any self-respecting organization should have a plan for stable running under conditions of aggression. And the NBU had such a plan, that is, the regulator of the banking system was ready for the next surge of Russian aggression.

"We also have quite a lot of experience in working under administrative restrictions, and only on February 24 did we realize that we were living in conditions of a full-fledged war. We had a clear understanding of what needs to be done to stabilize the banking system and make it work as efficiently as possible in these new conditions.

Will Russia be able to mitigate the impact of sanctions

Russia is trying to minimize the sanctions pressure, but the Russian elites were completely unprepared for the current situation.

The steps taken by the Russian central bank are reactive, its behavior is similar to the behavior of 2014-15. At that time, the Russian economy got a strong blow, but was able to normalize the situation and ensure movement forward, albeit at a lower level. Now the situation is radically different. Working with interest rates and pretending that the market economy works in Russia is a suicidal tactic.

What threats to the global economy from Russian aggression are

There are such threats, and they are connected, first of all, with the sale of food and energy resources. For example, food imports from Ukraine are quite important for China.

"If the situation in Ukraine does not stabilize in a couple of weeks, respectively, the sowing campaign will not proceed as in previous years, then this could significantly threaten the global economy and China in particular," Nikolaychuk notes.

Therefore, the NBU expects that the West will make significant efforts to ensure that this war ends as soon as possible. Since the risks for China are also quite significant, the NBU hopes for political pressure from China on Russia in order to end the war as soon as possible.