Russia's full-scale military invasion of Ukraine has inflicted massive human and economic damage. Ukraine's economy has been resilient, supported by effective policy responses and considerable external support. The outlook remains exceptionally uncertain. Labour shortages and attacks on energy supply, logistics and businesses are slowing economic activity and elevating inflation. Achieving fiscal sustainability requires mobilising domestic revenues, improving spending efficiency and securing sustained external support. Reducing tax compliance burdens and narrowing the scope of simplified tax regimes would raise revenues and reduce tax distortions. Improving public investment management, strengthening procurement practices and enhancing subnational governments' capacity will help ensure efficient use of scarce public resources. Stronger growth of investment, productivity, and exports will be central to the recovery, entailing improvements in framework conditions for business through stronger rule of law, lighter regulatory burdens, more competitive markets and deeper access to finance. Laying out a clear path for environmental and emissions taxes and prices will encourage reconstruction of a greener, more efficient economy. Supporting demobilised defence personnel and displaced persons to reintegrate into the labour force, emigrants to return, and women to raise their labour market participation will lift growth, bolster public finances and improve well-being.
SPECIAL FEATURE: RAISING INVESTMENT AND EXPORTS
