Ukraine 2042. A Strategy Worth Two Million Dollars, Disappointment Worth Billions and Zero Prospects

This piece is an extended explanation of why we will not miss Yuliia Svyrydenko, and why we view the arrival in the government of Oleksandr Kravchenko, the new economy minister, with reserve. At the same time, it is also a fine example for Serhii Koretskyi of exactly how not to do things, if he doesn't want his own resignation, too, to be received as a relief.

The editorial team has obtained a draft of Ukraine's Economic Development Strategy for 2027–2042. It is not the final document; work on it is still under way. Even so, it has a coherent structure and looks, on the whole, finished, and its more than 50 pages are enough to draw a conclusion about how the government envisions the Ukraine of the future. Short version: much as it looks today.

Right now, Ukraine's economy is barely flickering. We get to watch Russia wither only thanks to the support of our partner countries. Even with that undeniably substantial help, we are dealing with:

• a decline in economic activity and output, above all in energy, light industry and machine building;
• a worsening forecast for real GDP growth, down to 1.3 percent by the end of 2026;
• a widening current account deficit for January–April 2026, reaching as much as $14.4 billion, against $9.3 billion a year earlier;
• a state budget deficit widening to 21 percent of GDP;
• accelerating inflation, forecast to reach 9.4 percent by year's end.

We are, broadly speaking, holding on, but we are a long way from development. What is worse, we have precious few preconditions for development, and not one of them is new: agricultural exports, rebuilding destroyed housing and infrastructure, restoring energy supply, and trade, such as it is. However much we might dream of building a new Ukraine after the war, with a foundation like this we will end up rebuilding the one we had. Which is exactly why every new economic development strategy deserves attention.

Schrödinger's McKinsey

However naive these hopes may be, every time, we go looking in these documents for breakthrough ideas, bold decisions, unconventional approaches and solid forecasting. Anything that would let the Ukrainian economy leap into the future, rather than crawl for years toward its own 2021 benchmarks.

The document in our hands was publicly announced both on the strategy's official website and at a meeting of the Presidential Business Support Council, presented as the joint work of the Ukrainian government, the World Bank, Kyiv School of Economics and McKinsey itself. A ZN.UA source in the government says McKinsey's involvement in drafting the strategy cost around $2 million in donor funding, which Chrystia Freeland personally helped secure. So expectations were high for every dollar of those two million.

In the document itself, however, only the World Bank's contribution is officially acknowledged, described as “analytical support.” McKinsey appears just once, as one of the possible participants in an advisory body for capital mobilization—not as the author of the analysis. Everyone else goes unmentioned entirely.

Despite this, the involvement of McKinsey, and of Oleksandr Kravchenko, head of its Ukrainian office, in preparing the document was central. He was a member of the core project team, and roughly two dozen McKinsey staff altogether took part in writing the strategy. A McKinsey working presentation we were able to review is identical, in structure, goals and objectives, to the draft strategy described here. Why McKinsey goes unlisted among the authors is hard to say. On one hand, the product's quality is so poor that they may have been embarrassed to put their name to it. On the other, they clearly weren't embarrassed to take the money for such blatant junk.

Worst of all, Oleksandr Kravchenko was recommended for the post of economy minister personally by the new prime minister, Serhii Koretskyi, out of confidence in his exceptional vision, competence and unconventional views on economic development.

So how, exactly, does the new economy minister see Ukraine?

The strategic minimum

The strategy is the next iteration of the National Economic Strategy 2030, which the government also developed jointly with the World Bank. It envisions three implementation phases: immediate reforms before the active phase of the war ends, medium-term reforms in the year following the war (projected as 2027) and large-scale growth over the three to five years after that.

The drivers of economic growth are expected to be as follows:

• productivity—from 1.3 to 5 percent a year;
• investment—from 16 to 24 percent of GDP;
• human capital—a net inflow of 3.1 million people into the labor market.

The strategic goals:

• macroeconomic stability;
• a better business environment;
• restoring and modernizing critical infrastructure;
• growing the pool of skilled labor.

Each goal comes with key tasks, spelled out, after a fashion, into specific proposals.

Priority sectors of the economy: transport, IT, heavy machine-building, the defense industry, agriculture, construction materials, electronic components, critical raw materials and renewable energy.

All told, it is entirely in the spirit of recent years' government policy: dream small, aim at the nearest targets, develop what is already developing.

We won't nitpick the details, since this still isn't the final document. But we'd advise the drafters to take a closer look at the data on the shadow economy's size, the unemployment rate, private investment growth figures, inflation targets and public debt benchmarks. Because right now it feels as though not even every ministry has seen this document and checked the numbers.

Carelessness in the details could be forgiven if the core ideas were brilliant, groundbreaking or even just promising. In this case, there will be no such allowance.

In the fairly abstract descriptions of what, specifically, we are supposed to do to achieve all this, there is nothing new whatsoever. All the proposals fall, roughly, into three groups.

The first—initiatives already underway, such as the “Economic Security Bureau reform” (dragging on since 2021), regional smart specialization (which began back in 2016) or the International Investment Advisory Council (running since May of this year).

The second—initiatives that have been “half-finished” for years, such as settling the debt from the “green” feed-in tariff, automatic VAT refunds or ratifying the OECD Anti-Bribery Convention.

The third—perennial reforms that have sat at the discussion stage for years, among them the new Labor Code, launching the mandatory funded tier of the pension system or opening up the rail freight market.

Logically, the document should go on to explain what has kept the initiatives already underway from becoming breakthroughs, what is standing in the way of finishing the “half-finished,” and why the “perennial reforms” never get off the ground—ideally with a forecast of measurable effects from carrying out all these powerful plans. But no such luck.

A pile of questions without answers

The document is poorly structured, so we've made you a table (see below) meant to show the links between the goals, the tasks and the government's proposals.

The table shows that these links are flickering at best, and that the proposals are extremely vague and fail to answer the actual question: how, specifically, do we get there? How are we supposed to shrink the shadow economy if the proposals amount to risk-based oversight, competition policy, and a registry of “drops” [money-mule accounts]? All of that already exists, and none of it is helping.

How are we supposed to attract investment if the proposals just list UkraineInvest, already in place, alongside the perennial ideas about developing the financial sector and shrinking the state's footprint? And the central problem—insuring against war risk—isn't even acknowledged; the document simply notes that we already have an Export Credit Agency insuring export contracts. Help yourself, mind you don't get splashed. And if you don't happen to be an exporter, well, that's your problem.

Economic Development Strategy of Ukraine for 2027–2042

How, specifically, will a new Labor Code, pension reform and veteran integration add 3 million people to the workforce? What does expanding Ukraine's participation in the Horizon Europe program actually mean, when it is already available to our applicants, with the full range of support from the assistance office to mentorship? What, specifically, does “expanding access for Ukrainian goods and services to foreign markets” mean—which goods and services, to which markets and why?

Good that we've written ensuring an effective state as one of the steps in corporate governance. Everyone does that. But what, exactly, is missing from our corporate governance so that all sorts of people like Vasyl Veselyi—implicated in the Mindich-tapes banking scandal—can't single-handedly rubber-stamp supervisory boards at state companies in the future?

Wonderful that we've once again mentioned the importance of competition policy. Could we also get an analysis of what's currently stopping the Antimonopoly Committee from doing its job properly?

Excellent that a reform of the Financial Monitoring Service has turned up alongside the ESB reform. Could we clarify whether it will actually reform the agency itself? Or will it, as before, merely rearrange its procedures for interacting with other regulators—regulators that will never work as they should as long as the head of the Financial Monitoring Service is appointed rather than elected?

We could go on for a while; the text has more contradictions than harmony: deregulation sitting next to hyper-regulated EU norms, a progressive personal income tax presented as a tool for shrinking the shadow economy, growth in private investment in business alongside unchanged demand for government bonds, and so on. We would be appalled, but we're used to it by now.

***

You know who does the same thing over and over and expects a different result?

This strategy is one more piece of evidence for the deep crisis in Ukrainian public administration: the same proposals, the same lack of detail, the same absence of courage.

With tools like these, there will be no normal growth rate—there will be what we have now, for as long as our partners keep supporting us, and worse than now once they grow tired of it. And when priority sectors are named in a standalone paragraph at the start of the document and never mentioned again in any concrete action, it's clear the economy isn't actually a priority for its authors at all—just a box to tick for the record.

It is a shame that Ukraine's personnel crisis runs so deep that this caliber of strategic thinking opens the door to a minister's chair instead of oblivion.

To reach the future, Ukraine needs a rocket, or at least a plane. And the Ukrainian government, once again, is choosing a train—on track gauged exclusively to 1520 mm.