Geopolitical Risk and Long-Term Asset Resilience in Eastern Europe: Ukraine as a Barometer for Post-Conflict Investment

The Russia-Ukraine war has transformed Ukraine into a critical case study for understanding geopolitical risk and asset resilience in post-conflict economies. As of 2025, Ukraine’s demographic and societal stability—shaped by displacement, low fertility rates, and labor shortages—offers a barometer for assessing investment risk in Eastern Europe. This analysis draws on comparative data from Georgia, the Balkans, and OECD reports to contextualize Ukraine’s challenges and opportunities.

Ukraine’s Demographic Crisis: A Double-Edged Sword

Since 2022, Ukraine has lost over 11.5 million people to displacement, with 8 million internally displaced and 3.5 million fleeing abroad [1]. This mass migration has created labor shortages, particularly in skilled sectors, and fragmented regional economies. The war has also accelerated Ukraine’s already dire demographic decline: its total fertility rate fell to 1.17 in 2021, one of the lowest globally [2]. These trends mirror those in post-conflict Balkan states like Bosnia and Herzegovina, where population loss from the 1990s wars and emigration has reduced labor forces by up to 30% [3].

Yet, Ukraine’s demographic crisis is compounded by ongoing conflict. Unlike Georgia, which stabilized after its 2008 war and saw FDI rebound through infrastructure projects, Ukraine’s war has created persistent uncertainty. For example, while Georgia’s FDI inflows dropped during the 2008 crisis, they recovered by 2010 due to political stability and EU alignment [4]. In contrast, Ukraine’s FDI inflows have remained volatile, with sectors like agriculture and technology attracting investment despite war-related disruptions [5].

Investment Risk: The Role of Societal Stability

Societal stability metrics, such as public service resilience and governance quality, are critical for investment outcomes. Ukraine’s economy has shown remarkable resilience, with GDP stabilizing in 2024 despite renewed attacks on infrastructure [1]. This stability is partly due to international aid—$45.1 billion in foreign reserves as of July 2025—funding public wages and reconstruction [6]. However, governance challenges persist. Corruption and weak institutions remain barriers, deterring private capital even as the government pushes EU-aligned reforms [5].

Comparative data from the Balkans highlights the importance of institutional reforms. Countries like Montenegro and North Macedonia, which implemented targeted FDI policies and EU integration strategies, saw stronger economic recovery post-conflict [3]. Ukraine’s success in attracting FDI will depend on its ability to replicate these reforms, particularly in public revenue collection and judicial efficiency [1].

Geopolitical Risk and Asset Resilience

Geopolitical risks, including war spillovers and policy divergence, amplify investment uncertainty in Eastern Europe. The OECD notes that Ukraine’s recovery hinges on macroeconomic stability and structural reforms, but volatility in the security environment remains a wildcard [1]. This mirrors broader regional trends: a 2025 study found that geopolitical shocks, such as the Russia-Ukraine war, increased financial market interconnectedness and risk transmission, particularly in commodity and foreign exchange markets [7].

For investors, Ukraine’s experience underscores the need to balance short-term resilience with long-term structural reforms. While sectors like agriculture and renewable energy show promise, asset resilience requires diversification and risk mitigation strategies. For example, Islamic and ESG investments demonstrated lower volatility during the crisis, suggesting a role for impact-driven capital in post-conflict recovery [8].

Conclusion: Ukraine as a Barometer for Post-Conflict Investment

Ukraine’s demographic and societal stability—marked by displacement, low fertility, and governance challenges—provides a lens for evaluating investment risk in post-conflict economies. While its resilience in agriculture and tech sectors offers hope, the war’s protracted nature and geopolitical uncertainties highlight the fragility of recovery. Investors must weigh these factors against broader regional trends, recognizing that asset resilience in Eastern Europe depends on both local reforms and global cooperation.

Source:
[1] OECD Economic Surveys: Ukraine 2025 [https://www.oecd.org/en/publications/oecd-economic-surveys-ukraine-2025_940cee85-en/full-report/fostering-macroeconomic-stability-and-a-sustainable-recovery_24ed81a1.html]
[2] Uncertainty and Fertility in Ukraine on the Eve of Russia's Full-Scale Invasion [https://pmc.ncbi.nlm.nih.gov/articles/PMC11387573/]
[3] The vanishing Balkans. The region's demographic crisis [https://www.osw.waw.pl/en/publikacje/osw-commentary/2025-03-05/vanishing-balkans-regions-demographic-crisis]
[4] FDI, FDI's Impact on Economic Growth and the Investment [https://eugb.ge/index.php/111/article/view/322]
[5] 2024 Investment Climate Statements: Ukraine [https://www.state.gov/reports/2024-investment-climate-statements/ukraine]
[6] Ukraine Recovery Plan: Risk and Investment Assessment [https://www.specialeurasia.com/2025/07/21/ukraine-recovery-plan-risk/]
[7] How has the relationship between major financial markets... [https://www.nature.com/articles/s41599-024-04231-7]
[8] The impact of Covid-19 and Russia–Ukraine war on [https://www.sciencedirect.com/science/article/pii/S2199853123002184]