Building back Ukraine

Ukraine’s war efforts have garnered positive results recently, but the same can’t be said for the country’s economic prospects. 

Driving the news: Volodymyr Zelenskyy, the president of Ukraine, met with Larry Fink, the head of BlackRock, to discuss a fund that would help rebuild the country after the war. 

  • BlackRock, the world’s largest asset manager, has offered pro bono advice to set up the fund, aiming to position Ukraine as an attractive country for global investors.  

Why it’s happening: According to the Ukrainian government’s recovery plan, it will cost US$750 billion to rebuild Ukraine’s infrastructure and revive its economy. 

  • Ukraine's GDP is projected to contract by 33% by the end of the year.

  • Its poverty rate is projected to grow by as much as 58% by the end of the year.

  • Rampant inflation (23% in August) has created even more pressure.

Why it matters: Much of the money to rebuild Ukraine’s economy will likely come from donor countries, but with allies busy dealing with their own problems (read: energy crisis), the country is getting creative in raising the huge sums needed for reconstruction.

  • Allies have been giving Ukraine ~US$1.5 billion a month since the war began, which is about $5.5 billion short of the government’s expenses alone. 

Bottom line: Reopening a few McDonald’s locations isn’t enough to bring back any sense of normalcy. As the war rages on, Ukraine is going to need to find the cash to stay afloat.