Improving the investment climate: Monitoring the implementation progress
Ukraine’s economy returned to growth in 2023. For 2025, we project GDP to grow by 1.9%. While this development demonstrates the economy’s resilience during the ongoing war, its moderate pace indicates that a long road to recovery lies ahead. To support this recovery, attracting private investment is essential. Therefore, improving the investment climate should be a key focus.
In 2024, the German Economic Team and the German-Ukrainian Chamber of Commerce and Industry (AHK Ukraine) launched a Policy Study identifying 30 reform proposals to improve the investment climate already during the war. Now, it is time to monitor and support the implementation progress. Based on interviews with key stakeholders, our current study finds in a monitoring assessment that more than half of the 30 proposals were partly or fully implemented. Moreover, the current study examines in detail the remaining proposals considered as ‘quick wins’. Here, concrete legislative changes are proposed.
Economic background
Ukraine’s economy is estimated to grow by 1.9% in 2025 (Betliy et al., 2025). This is the third year in a row with positive GDP growth rates during the full-scale war.
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However, Ukraine remains far from its pre-war level after the GDP decline of 29% in 2022. Even with growth projected at more than 2% in both 2026 and 2027, Ukraine will remain around 17% below its pre-war level (Betliy et al., 2025), and even more, if we consider the pre-war trend growth.
To improve the growth outlook, a vast majority of economic studies emphasise the contribution of foreign direct investment. For example, Becker et al. (2022) underscore the importance of FDI as a “cornerstone” for Ukraine’s economic recovery. In this context, the German Economic Team and AHK Ukraine prepared a joint study dedicated to improving Ukraine’s investment climate, which would in turn improve the investment outlook from both foreign and domestic sources.
Methodological approach
In 2024, the joint study provided a set of 30 reform proposals. These proposals were identified with macro-financial stability in mind, a level playing field for private businesses, and a transparent and competitive investment climate, while ensuring alignment with the broader reform trajectory and consistency with existing commitment obligations (EU, IMF). The reform proposals can be broadly split into horizontal policy areas that affect all economic sectors and vertical policy areas with sector-specific proposals. Moreover, ‘quick wins’ were listed. They were defined as reform proposals that are quickly implementable and that quickly generate significant improvements towards a more competitive investment climate.
Methodological approach
Source: own illustration, see Kirchner et al. 2025, Kirchner et al. 2024.
Our current study is now focused on monitoring the implementation progress. For this purpose, interviews with member companies of the Chamber’s committees were conducted to understand how things developed. The implementation progress is documented using a “traffic light” system:
- Proposal substance finally approved in the legislative process, signed by the President and published → ‘Fully implemented’
- Suitable draft laws submitted to the Verkhovna Rada, or parts of the proposal have been finally implemented → ‘Partly implemented’
- Only preliminary steps taken or no steps at all → ‘Not implemented’
Implementation progress
As a result of the interviews conducted throughout 2025, more than half of the 30 reform proposals were found to be fully or at least partly implemented:
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Most implementation progress was observed in the energy sector. All seven proposals were either fully or at least partly implemented. Meanwhile, in the construction sector, a wide gap between reform proposals and reform implementation is still observed.
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Legislative changes for ‘Quick wins’
Finally, the study highlights proposals that are quickly implementable and, at the same time, provide a significant improvement to the investment climate. For these proposals, the necessary legal changes are outlined in detail and concern the following areas:
- Waiving work permit requirement for foreign directors
- Reducing HR Documentation
- Adjusting the threshold per counterpart in the transfer pricing (TP) report
- Providing SAF-t files to tax authorities
- Recognition and enforceability of ISDA master agreements for cash-settled commodity markets
- Access to financing: 5-7-9 loan subsidy programme for companies with foreign capital
- Updating modular shelter construction standards
Conclusion
Overall, our monitoring of the implementation progress reveals a strong sign of reform commitment under adverse circumstances. More than half of the proposals were either fully or at least partly implemented. The energy sector, which is currently facing extraordinary challenges, shows the most pronounced reform progress. This development highlights the Ukrainian Government’s willingness to listen to and to further attract private foreign investors in strategic sectors. The proposals listed as ‘quick wins’, and the identification of legal changes, can further accelerate implementation progress. All in all, reform progress is a key condition for attracting foreign investors and thereby lifting Ukraine’s economic growth potential. The message delivered by the German Federal Minister of Economic Affairs and Energy Katherina Reiche in our report signals that the country is facing this task not alone, but can count on strong support by Germany:
“Germany will remain a strong and reliable partner for Ukraine for as long as it takes – in the face of Russia’s illegal and brutal aggression and on Ukraine’s path towards prosperity and accession to the European Union”.
This newsletter is based on the Policy Study “Rebuilding Ukraine through Private Investment: Proposals from German companies – Monitoring and supporting the implementation process”.
References
- Becker, T, B Eichengreen, Y Gorodnichenko, S Guriev, S Johnson, T Mylovanov, K Rogoff and B Weder di Mauro (eds) (2022) A Blueprint for the Reconstruction of Ukraine, CEPR Press, Paris & London. https://cepr.org/publications/books-and-reports/blueprint-reconstruction-ukraine
- Betliy, O. Kravchuk, V., Poluschkin, G. & Kirchner R. (2025) Macroeconomic forecast for Ukraine 2025 – 2026: update. German Economic Team Ukraine Forecast Series 02 2025
- Kirchner, R., Poluschkin, G., Ries, J & Otten, T. (2024) Rebuilding Ukraine through private investment: Proposals from German companies. German Economic Team Ukraine Policy Study 02 2024.
- Kirchner, R., Poluschkin, G., & Otten, T. (2025) Rebuilding Ukraine through private investment: Proposals from German companies– Monitoring and supporting the implementation process –. German Economic Team Ukraine Policy Study 05 2025.
- State Statistics Service of Ukraine (2025a): Quarterly National accounts Банк даних | Державна служба статистики України, latest retrieved on 10 Dec-25
