By the end of this decade, even if reconstruction goes well and all resources of Ukraine before the war are restored (the industry and minerals in Eastern Ukraine are in the hands of Russia), the economy will still be 15% below its pre-war level. The unemployment rate in Ukraine was 16.8% in January, but there is still a shortage of workers due to the emigration of skilled workers and mandatory military service. About 5.9 million Ukrainians remain displaced outside the country and 3.7 million as internally displaced persons. Some of Ukraine's resources have been sold to Western companies and the Russian state has absorbed or resold foreign entities.
Spending on construction, technology, and new equipment reached a peak of 14.4 trillion rubles, 10% more than the previous year. Inflation has increased and the ruble has devalued, raising the interest rate to over 20%. The European economy has been weakened by high production costs after losing cheap energy imports from Russia. Despite a modest economic recovery last year, the war has destroyed Ukraine and weakened the European economy.
The war between Ukraine and Russia has brought devastating losses, estimated to have a high number of civilians and soldiers killed or injured, a GDP reduction of 25%, and millions of people in poverty. Russia's economy, despite sanctions, has managed to navigate them and invest a large part of its budget in defense matters. However, it faces long-term economic challenges.
While Russia continues to invest in technology and defense, Ukraine is facing a critical situation needing reconstruction and external financial support. The privatization of state-owned enterprises in Ukraine is underway to attract foreign investment. In this context, the economies of Ukraine and Russia are heavily affected by the consequences of the war and post-conflict reconstruction.
