Ukraine will need $570 billion to recover in the aftermath of Russia’s war aggression
The previous day saw the publication of the fourth Rapid Damage and Needs Assessment (RDNA4) — undertaken jointly by the European Commission, the World Bank Group, the Government of Ukraine, and the United Nations, with support from other partners. The 200+ page report takes stock of three years of the ongoing Russian invasion, estimating damage and losses – economic, social and monetary — along with assessments of recovery and reconstruction needs for 10 years. As of 31 December 2024, the total cost of reconstruction and recovery in Ukraine stands at $ 530,26 billion, which exceeds manyfold Ukraine’s annual GDP level. That said, the losses inflicted on some individual sectors of the Ukrainian economy, primarily the energy sector, have increased by tens of billions of dollars over the past year alone. Following are more figures and expert opinions.
LOST ASSETS
It is worth noting that the damage estimates contained in the report cover only the property completely destroyed or damaged as a result of hostilities, and not include the value of facilities and infrastructure over which Ukraine temporarily lost control due to the enemy’s occupation of territories in the south and east of the country, neither do they include the potential value of minerals currently inaccessible to Ukraine’s government due to Russian invasion.
The total direct damage to buildings and infrastructure alone, according to the report, hits $176 billion, suggesting it grew by $24 billion over the past year, from $152 billion estimated by the third report (DNA3).
The lion’s share of this increase is accounted for by the damage inflicted on Ukraine’s energy sector. Damage to assets, including electricity generation, transmission and distribution infrastructures due to increased enemy attacks grew by 93 percent, while the number of facilities destroyed and damaged in Russian missile and drone attacks during 2024 increased by 70 percent from 2023. This brings the direct damage to the energy and mining sectors in excess of $20 billion.
As pointed out by Ukrainian Energy Minister, Herman Halushchenko, the sector endured over 30 massive attacks over three years of the full-scale war. Moreover, Ukraine has lost 18 GW of power generation capacities located in areas currently under Russian control.
“On December 12 last year, our energy grid endured the most massive attack in its history, with around three hundred missiles and drones attacking simultaneously… The attacks have changed, become more massive, involving the use of modern weapons, including rockets with cluster munition warheads, in ever increasing numbers and frequency. There were more than 30 that massive attacks launched [on Ukraine’s energy grid over three years of Russia’s war of aggression]. We are not even counting daily attacks. Because our energy grid comes under attacks every day, every night,” said the Energy Minister.
Photo Courtesy of DTEK Group
Last year alone, 10 GW of electricity generation was lost or incapacitated in the aftermath of such strikes. This is roughly equivalent to the peak consumption of countries such as the Netherlands or Finland.
Trade and industrial sectors suffered a damage exceeding $17 billion — almost on a par with the energy sector. Direct losses inflicted on the sectors of education and science are estimated to have exceeded $13 billion, and agricultural sector has suffered around $11 billion in losses.
The total losses inflicted on the transport and housing sectors are even higher – estimated at $37 billion and $57 billion, respectively. An estimated 13 percent of the overall housing stock has been damaged or completely destroyed, including 2.5 million households that suffered damage of varying degrees.
Approximately 72 percent of the damage is accounted for by near the frontline regions of Ukraine: Donetsk, Kharkiv, Luhansk, Zaporizhzhia, and Kherson, with total losses estimated at $116 billion, as well as the Kyiv region, which suffered significant losses in the first weeks of the war and is now one of the priority targets for Russian missile and drone strikes.
Marta Kos. Photo courtesy of Katja Kodba/via STA
“The assessment confirms the staggering damage that Russia has caused to Ukraine. The EU is already supporting Ukraine’s reconstruction and recovery effort, mobilizing more private investment through the Ukraine Investment Framework and helping the country integrate deeper into the EU Single Market. This will be a guarantee of Ukraine’s recovery and create new opportunities for Ukrainian and European businesses,” said EU Commissioner for Neighborhood Policy and Enlargement Negotiations Marta Kos.
The authors of the report estimate the total economic, social and other monetary losses at almost $589 billion, which significantly exceeds the damage inflicted on assets. The largest losses are reported for trade and industrial sectors (some $214 billion), agricultural sector ($73 billion), energy and mining sectors ($72 billion), transport sector ($47 billion), plus the cost of mine clearance and explosives hazards management ($30 billion).
At the same time, the overall estimates of the material damage caused by Russia’s full-scale invasion do not include the income lost by households, which, according to analysts, has exceeded $73 billion so far.
“The Government of Ukraine, with the support of international partners, has been implementing a rapid assessment program for the third year in a row, which allows us to plan for economic recovery in a more systematic fashion. And we see that the extent of the damage is growing with every passing year,” stated Yulia Svyrydenko, the Ukrainian Senior Vice Prime Minister and Minister of Economy.
FINANCIAL NEEDS FOR RECONSTRUCTION AND RECOVERY
The report estimates Ukraine’s total needs for reconstruction and recovery over the next 10 years at approximately $524 billion, amounting to almost three nominal GDPs for last year.
“The new data exceeds the previous estimate by $38 billion. Such huge figures mean that the reconstruction should become a global-scale project,” Prime Minister Denys Shmyhal said in a comment.
He said that the Government has defined the main principles to be followed in the reconstruction and recovery effort. These are “rebuild better than before”, the principles of safety, energy efficiency, accessibility and inclusiveness.
The cost of recovery and reconstruction of the housing sector will be the greatest, estimated at approximately $84 billion. At least $78 billion is needed to restore the transport sector, $68 billion the energy and mining industries, and $64 billion the sectors of trade and industry. The restoration of the agricultural sector will take $55 billion, another $39 billion is needed to support social security programs, and mine action and explosive hazard management programs are estimated to cost at least $30 billion.
According to analysts, at least $13 billion will be needed just to clear the rubble and dispose of (recycle) the garbage!
While the report provides estimates of the needs for reconstruction during the first post-war decade, both the authors of the report and Ukrainian government officials emphasize that the recovery and reconstruction effort should start immediately, even before the war ends.
“The main principle is that reconstruction must take place now. The quality of life of millions of people, the prospects for the return of Ukrainians from abroad, and the creation of the areas of growth that will push our economy forward depend on this,” Denys Shmyhal emphasized.
The report identifies 348 priority projects worth a total of $17 billion. More than $7 billion needed for full or partial financing of 127 projects has already been found thanks to domestic reserves and assistance from international partners. The money is being spent on priority projects in the housing sector and transport industry, the sectors of education, healthcare, social security, energy, and water supply, as well as mine action and civilian protection. That being said, the overall shortage of funds for recovery and reconstruction programs is estimated to reach approximately $10 billion this year.
It is unlikely to be easier after the war ends. Therefore, one of the key priorities should be to solicit private investment into recovery and reconstruction programs.
“Private sector engagement will be crucial for the success of reconstruction. We have developed a package of incentives for the private sector: tax and customs benefits, subsidies on the capital investment, grants, guarantees and equipment aid from the European Commission within the Ukraine Facility, as well as an access to the infrastructure of war risk insurance provided by the EBRD, DFC, MIGA, and international export credit agencies,” Yulia Svyrydenko said.
Photo: unity.gov.ua
In order to achieve a successful recovery, Ukraine needs to double its GDP, solicit multi-billion-dollar investments, and hire 4.5 million more workers, according to Deputy Prime Minister and Minister of National Unity Oleksiy Chernyshov.
At the same time, the report by the authoritative global institutions emphasizes, among other things, that prioritizing investments in recovery and reconstruction programs will be crucial for Ukraine’s accession to the EU and ensuring its sustainability for a long run.
Vladyslav Obukh, Kyiv
Headline Photo Credit: National Bank of Ukraine
