EME Macro/Strategy: Ukraine – a macro primer

In the context of the peace agreement that is being negotiated by the US between Ukraine and Russia, we present an overview of the state of the Ukrainian economy. From a business-cycle perspective, GDP growth has rebounded after the sharp contraction in 2022 and is expanding currently at a pace that is comparable to that of Poland. If lasting peace is achieved, we would expect the pace of growth to rise materially, and plausibly double on a sustainable basis, as the rebuilding starts. Inflation is high structurally, worsened by the war, and it is likely to remain a challenge for Ukraine, going forward, in our view. War-related reconstruction financing needs have surged over the past year and are now estimated at approximately half a trillion USD. This report should also be read alongside our forthcoming strategy publication on the macroeconomic and market implications of a potential Ukraine-Russia truce. The impact of such a deal would be likely to extend across the global macro and equity markets for decades, shaping long-term investment trends well into the 2030s, in our view.