Olena Pavlenko and Maria Repko / Nov 2026
Image: Shutterstock
The global economic environment is changing, and Ukraine is pointing the way forward
Amid nightly drone raids, missile bombardments and electronic warfare, it is understandable to view the wartime situation in Ukraine as extraordinary. But while the scale is severe, the underlying challenges are not unique. Since the full-scale invasion, Ukraine has withstood many of the pressures that other countries are increasingly grappling with: disruptions to trade and logistics, attacks on critical infrastructure, fiscal constraints, labour shortages and energy insecurity.
In recent years, western economic policymaking has been undermined by aggressive autocracies, with Russia’s full-scale invasion of Ukraine representing a watershed moment. With investment decisions increasingly constrained by security risks, insurance gaps, labour shortages, and high financing costs, the world risks a growing divergence between where investment is most needed and where private capital is willing to go. But the ability to absorb shocks and recover quickly is becoming an important component of competitiveness. With its years of experience, Ukraine can offer the world important lessons on resilience and adaptation, but only if international partners are willing to rethink their approach.
Next year will mark the 80th anniversary of the World Bank’s first ever loan. In 1947, $250m was handed to the French government to finance railways, power grids, industrial machinery, steel mills and coal imports. At around $7.4bn in today’s prices, it remains one of the bank’s largest ever loans, and was foundational to Europe’s postwar reconstruction. Eight decades later, faced with another devastating land war in Europe, it is hard to imagine international financial institutions (IFIs) taking a similarly bold step. Today, IFIs are overly cautious and restrict their lending to low-risk, narrowly targeted projects rather than ambitious efforts to rebuild productive capacity and prevent economic collapse.
In a major report released this year, a consortium of Ukrainian civil society organisations have presented a roadmap on how the country’s potential could be harnessed. Ukraine today requires a strategic and risk-tolerant approach from IFIs that echoes the spirit of their original post-WW2 mission to achieve reconstruction and economic stabilisation. IFIs should prioritize sectors capable of generating long-term economic growth and strategic resilience like defense manufacturing, electricity grids, energy storage, logistics corridors and critical raw materials processing. These sectors may involve higher risks and larger capital requirements, but they also create the strongest multiplier effects for economic recovery and European integration.
In 2026, the luxuries of open trade, predictable supply chains, affordable energy and available finance can no longer be relied upon. To preserve an open and integrated global economy, governments, businesses and international financial institutions need to strengthen their models to survive “the new normal,” to quote the IMF.
But the onus is not only on Ukraine’s partners. Kyiv should continue to implement its own reforms, particularly around corruption, rule of law, and property rights, while maintaining a stable tax and business environment. Though elections remain unfeasible during full-scale war, Ukraine still demonstrates a commitment towards freedom and accountability. The “cardboard protests” in July 2025 against Zelensky’s government and its attempts to weaken anti-corruption institutions showed that even under martial law, civic reaction and public pressure remain important safeguards.
Also, Ukraine needs its people. Recent polling revealed that 67% of Ukrainian firms name workforce availability as their leading constraint. But millions will only return, or be convinced to remain, if they can access childcare, housing, employment and schooling alongside reintegration support for veterans, IDPs and bereaved families. Ukraine needs a human-centred recovery where improving living conditions for the workforce is treated as a matter of industrial policy. If both Ukraine and its partners both adapt in parallel, support can evolve from constant emergency aid toward a long-term engine for critical infrastructure modernisation.
Financial institutions’ success should be measured not only by the volume of lending, but by their ability to unlock productive investment and strengthen economic resilience. That requires an integrated approach to guide Ukraine’s recovery. Renewable energy investments without modern grids, industrial recovery without logistics connectivity, or electrification without generation and storage capacity would weaken the sustainability of reconstruction efforts. IFIs therefore need to move beyond project-by-project lending toward integrated economic transformation strategies combining infrastructure, industrial policy, energy security, and climate resilience.
There is a mismatch between Ukraine’s emergency reality and the traditional operating models of international financial institutions. Projects are delayed by onerous due diligence and fragmented procurement rules, private lending is constrained by war and currency risks, small businesses face unrealistic burdens to produce documentation not easily acquired during wartime. Meanwhile, Ukraine is still able to preserve core state functions, maintain public trust, and adjust rules and procedures rapidly under extreme pressure. Ukraine’s lenders should be similarly flexible by investing less in western consultancies and working more with trusted local actors on the ground, integrating civil society organisations within project implementation and recognise that resilience is an economic asset in its own right.
If financial institutions are willing to finance transformation at scale, post-war Ukraine could become one of Europe’s major industrial and energy growth hubs. The challenge is not whether they can finance such reconstruction, but whether they are willing to return to the ambitious role they were originally created to perform after World War II.
