Rebuilding Ukraine's economy, nearly two years after the Russian invasion, is estimated to cost a staggering $486 billion, 2.8 times its 2023 expected economic output, and far more than the earlier estimated $411 billion, a new study by the World Bank, the United Nations, the European Commission and the Ukrainian government published Thursday showed.
The estimate released Thursday covers the period from Russia's invasion on Feb. 24, 2022, through Dec. 31, 2023, and quantifies the direct physical damage to buildings and other infrastructure, the impact on people's lives and livelihoods and the cost to "build back better," the World Bank said.
That 10-year cost estimate is up from $411 billion last March, with housing needs topping the list at $80 billion, or 17%, followed by transport needs of $74 billion, or 15%, and commerce and industry at $67.5 billion, or 14%.
"The $486 billion is an unfathomably large amount, and, of course, it reflects real needs," said Arup Banerji, World Bank regional country director for Eastern Europe, although he noted that the high rate of damage seen in the first months of the war had slowed sharply.
The report said direct damages from the war had reached almost $152 billion, with losses concentrated in regions such as Donetsk, Kharkiv, Luhansk, Zaporizhzhia, Kherson and Kyiv. Disruptions to economic output and trade, as well as other war-related costs, such as removing debris, would likely add another $499 billion, it said.
The new estimate excludes reconstruction needs already met through the Ukraine state budget or through partners and international support.
The losses it maps out are staggering, with about 2 million housing units – about 10% of the total housing stock of Ukraine – either damaged or destroyed, as well as 8,400 kilometers (5,220 miles) of motorways, highways and other national roads, and nearly 300 bridges.
The report said Ukraine needed some $15 billion to cover the most urgent repair, recovery and reconstruction priorities in 2024, of which about $5.5 billion had already been met through the state budget and donor support.
Banerji lauded the Ukrainian government for squeezing "every cent they could" out of their budget to cover costs, including social transfers to keep citizens from falling into abject poverty. They also planned to undertake some 200 separate reforms to governance, energy and other areas, he said.
"As it becomes clear that the war will be longer than most of us imagined or feared ... the Ukrainians themselves (are) saying we need to do the reforms for our economy to grow, to attract private sector investment ... to increase our tax revenues," he said. "Ukraine is starting to take much more ownership of its own future."
He said the Ukrainian economy had proven remarkably resilient in the face of the war. News that over $4 billion in foreign direct investment had flowed into Ukraine in the first three quarters of 2023 showed that foreign investors saw good opportunities, he said.
Four of five firms continued to operate in Ukraine, despite the war, with many relying on digital operations or moving sites to stay in business, he added.
The report noted that as of December, about 5.9 million Ukrainians remained displaced outside of the country, compared with 8.1 million reported in the last needs assessment in 2023. The number of internally displaced persons had also gone down to around 3.7 million, compared with 5.4 million in spring 2023.
