Theres immediate rebuilding, of critical infrastructure and housing, says Mylovanov, speaking to Fortune on Tuesday night from his Kyiv office, which at that moment had working lights, and electrical power to charge his devices. After the end of the war there will be six months of rebuilding just to bring the economy back, says Mylovanov, whos on leave from the University of Pittsburgh, where he is an associate economics professor.

The task is hugeand could cost up to $1.1 trillion dollars, more than was spent under the Marshall Plan rebuilding Europe after the Second World War.

Thats the estimate of Mylovanov and other economists in Ukraine, the U.S., and Europe, who have spent months designing a plan for the country to reconstruct its shattered infrastructure and revive its economy. Their 460-page report, out on Wednesday and published by the Center for Economic Policy Research in London, says rebuilding Ukraine will require a staggering sum.

Private investment critical

But to attract companies to invest in a perilous war zone with a history of widespread corruption, Ukraine will need a drastic overhaul of its judiciary system, and to create an outside agency, most likely run by the European Union, that would oversee the giant contracts once rebuilding seems possible. All that is necessary in order to avoid billions being appropriated by oligarchs or corrupt businesses.

Reconstruction is not about rebuilding Ukraine in the pre-war state, the report says. It is about a deep modernization of the country.

For businesses, the risks are greatincluding the potential for Russia to begin lobbing missiles at Ukraine, even if there is a peace deal. But Ukraines rebuilding, and the hundreds of billions likely to come from the U.S. and the European Union, could well lead to a post-war boom for companies willing to invest.

There will be a lot of procurement contracts, Mylovanov says. Those who enter early will have larger markets, and will maybe get a premium.

Mobilizing execs

Companies and governments are apparently already eyeing the potential for major deals. Next Tuesday, Ukraines Prime Minister Denys Shmyhal is due to travel to Paris with a delegation of Ukrainian business leaders to meet French companies, at an all-day conference about rebuilding the country, convened by President Emmanuel Macron. Frances Economy Ministry said in a statement last week that the meeting was geared to mobilize French economic players in reconstructing Ukraine.

Besides the humanitarian crisis, it could be a good business bet, in some economists opinion.

Its certainly an investment opportunity, says Ilona Sologoub, an economic analyst for VoxUkraine, a think tank in Kyiv, who was an editor on the rebuilding report.

Some sectors will recover quite fast, like agriculture. She says that with Ukraine under intense wartime emergency since February, the large weapons producers (the country was the 14^th biggest arms supplier until Russia invaded) and the countrys tech companies have rolled out innovations to cope with the conflict. Homegrown drones, and new medical products to treat battlefield wounds and burns, could be produced at scale and exported, once the war is over. There is an opportunity to have good results, she told Fortune on Tuesday.

Demographic catastrophe

Ukraine will not only require physical rebuilding, like new roads, bridges, and buildings. It will also need to piece together communities that have been blown apart by the war.

About one-third of the countrys 43 million people have fled their homes since February, with about 8 million taking refuge across Europemany of them women and children. The economists say men and elderly people comprise many of those left in Ukraine.

While current discussions tend to focus on ruined infrastructure, the potential demographic catastrophe may be more crippling in the long run, says the report.

Among those who have stayed are Mylovanovs students in at the Kyiv School of Economics. He says his classes have been 70% full throughout months of bombing, curfews and blackouts. Students show up, and they are studying, he says. It is much higher attendance than during the pandemic, when everyone wanted to be alone. Now, everyone wants to be together.

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By the time July rolled around, tightening monetary policy, heightened geopolitical tensions, and a declining market sentiment dynamically changed the investment landscape.

As the year comes to an end, European tech companies are facing a significant slowdown in dealmaking, tougher fundraising cycles, and fewer investors willing to commit to late-stage, large-round investments.

Thats the conclusion of an annual survey of the state of Europes technology market from Atomico, the venture capital firm started by billionaire co-founder of Skype Niklas Zennström.

VCs keeping cash in their pockets

The report finds that the dealmaking frenzy of 2022 started to cool off around July, and by August and September monthly investment had dropped to levels not seen since 2018 a 40% drop compared to the third quarter of last year.

In a survey sent to founders, around 82% said they believed it was harder to raise venture capital than it was 12 months ago the biggest change in founder sentiment since the report first started surveying the European tech sector five years ago.

Layoffs starting to hit

As cash dries up, more tech companies have had to lean down their operations drastically.

Globally, more than 200,000 tech workers have been laid off in the past year, according to Layoffs Tracker. Europe accounted for 7% of these layoffs with over 14,000 tech employees losing their jobs in the last year.

Weve gone from a period in 2021 where capital was abundant and cheap, to one where the cost of capital has increased and where capital is less readily available and its more difficult to fundraise, Tom Wehmeier, Head of Insights at Atomico & co-author of the report told Fortune.

You think about European tech, its barely 20 years old. And now were seeing its resilience put to the test.

U.S. investors turnings away from Europe

The slowdown in growth has left American investors shying away from the European market.

While over the course of 2022, the number of European investors in rounds of $100 million or more grew slightly, the number of active U.S. investors declined by 22%.

Much of this can be chalked up to the decrease, and in some cases the complete withdrawal, of crossover investors or funds that actively invest across both the public and private markets.

Unicorns becoming rarer

As fundraising slows down, so has the number of unicorns that have come to the market in 2022.

While 2021 saw a record number of new unicorns emerge in Europe, with 105 companies achieving billion-dollar milestones, only 31 unicorns have come to market this year by the time of the reports publication.

IPO window slammed shut

And as expected, the IPO window has also been slammed shut, the report says.

With highly uncertain and volatile public markets, only three tech IPOs reached a market cap of over $1 billion, compared to the 86 brought onto the market in 2021.

I think certainly our view and when we speak to other investors and other founders, is that we are not going to see a reversion back to the conditions we saw in 2021 anytime soon, says Wehmeier.

Women founders suffering

While this is bad news for all founders, it still has a greater impact on women or minority-led tech companies.

Around 87% of all VC funding in Europe is still raised by men-only founding teams, while the proportion of funding raised by women-only teams has dropped from 3% to 1% since 2018.

The good news

The report writes that the changing landscape of 2022 marks a shift away from the markets long-standing appetite for growth-at-all-costs towards a focus on growth efficiency.

Another thing to be optimistic about is the amount of talent in the European market.

As employees are recycled and redeployed across different tech companies, the number of founders who have graduated from successful unicorns has ballooned to almost 700.

This has created the greatest talent pipeline that Europe has ever had, the report writes.

And while the horizon for these tech companies looks bleaker over the next years, the companies that are getting funding are looking to change the world for the better.

The level of European investment in purpose-driven companies is looking to overtake 2021 levels and the continent now leads the world in the share of large investments going into these companies.

In contrast, the North American and Asian investment amounts into purpose-driven companies have decreased by around 50% and 65% respectively in 2022, when compared to last year.  

Tech founders are also remaining pretty optimistic about the market.

Despite all the headwinds they face, 77% of founders in a survey said they remained confident in the future of European technology going into 2023.  

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The changes back up recent messages from Chinese officials that the country is entering a new stage of its COVID response and affirms bullish calls from analysts who expected the Chinese mainland to reopen after years of COVID-era isolation sooner than previously expected. 

On Monday, Morgan Stanley analysts said that Chinese stocks were undervalued now that the reopening of the Chinese economy seems imminent. Investors had already gotten the memo; theyve been piling into Chinese equity markets based on hints from Beijing that it was preparing to relax some of the countrys strict COVID rules. Hong Kongs Hang Seng Index is up 30% since the beginning of November. (The Hang Seng Index is still down 37% from its February 2021 peak). Both Shanghais SSE Composite Index and Shenzhens SZSE Component Index are up 10% since the beginning of last month.

It is a great opportunity to buy the dips in the next few months, Winnie Wu, Bank of Americas chief China equity researcher, told the South China Morning Post.

Yet mainland Chinas reopening and the inevitable COVID outbreak to follow will likely cause further economic disruption in the first half of next year. Despite their newfound optimism, analysts are warning of a bumpy economic recovery ahead.

Beijing relaxes COVID rules

For nearly three years, China has used tough measures to suppress the spread of COVID-19. Officials have imposed multiple rounds of mass testing and district-wide snap lockdowns to contain even a handful of cases. But rare, nationwide protests against lockdowns and constant testing in late November likely accelerated Beijings concession that the country needs to move on.

On Wednesday, China introduced new rules that represent the biggest easing of its hardline COVID response to date. Chinas State Council announced that those with mild COVID symptoms will be allowed to recover at home instead of in quarantine camps, and people no longer need a negative COVID test to travel or enter most public venues. And while lockdowns may still be imposed, officials will limit them to individual floors or buildings, rather than entire neighborhoods or districts.

Some of these measures were already being carried out by local officials in cities like Shanghai, Beijing and Guangzhou where protests occurred. And last week, Vice-Premier Sun Chunlan, Chinas top official responsible for the countrys COVID response, said mainland China was in a new stage of the pandemic. Chinese state media had also been laying the groundwork for a shift away from COVID-zero, with Xinhua, the countrys state-controlled news agency, saying the most difficult phase of the pandemic has passed in a Tuesday article. 

When will China reopen?

Lockdowns and other COVID restrictions have weighed on Chinas economy. Chinas GDP grew by just 3.9% year-on-year in the third quarter, below Beijings target of 5.5%. The countrys most recent wave of COVID outbreaks and lockdowns are putting it in a deeper hole. Service activity shrank in November to reach a six-month low, according to the latest Caixin services purchasing manager index. Factory activity also shrank in November, extending declines in October. 

COVID-zero is also depressing Chinas export market. A hastily-imposed COVID lockdown in one of Foxconns major iPhone factories led to protests and disrupted production. Foxconn on Tuesday said the chaos contributed to a 29% decline in revenue in November compared to the month prior. Its the first time the manufacturer has ever recorded a drop in monthly revenue in the important pre-holiday season.

Beijing may be as concerned about the disruption to foreign manufacturers as it is about the protests, says Alicia Garcia-Herrero, chief Asia-Pacific economist for investment bank Natixis. China cannot afford to lose the jobs offered by foreign companies, she says. 

Prior to Wednesdays announcements, most investment banks pegged mainland Chinas exit from COVID-zero to the middle of next year. Even as it deemed Chinese stocks undervalued, Morgan Stanley stuck by an early prediction that the country will reopen by spring 2023, moving to a system where broad mandatory containment measures and large-scale COVID testing will no longer be adopted and rolling back many social distancing measures.

But even before Wednesday, the countrys subtle retreat from COVID-zero had prompted some banks to move up their forecasts of a full-reopeningor express more confidence in their bullish calls from earlier in the year. Goldman Sachs forecasts a mid-2023 reopening, but put chances of an earlier reopening at 45% on Sunday, up from 30% in November.

Garcia-Herrero says China might open as early as the end of this year. Were assuming the whole of 2023 will be open, she says.

Chinas zigzagging economic recovery

Theres a big caveat to mainland Chinas reopening: an easing of restrictions will inevitably trigger a large surge in COVID cases unlike anything the country has seen before.

Such an outbreak could have deadly consequences, given relatively low rates of vaccination among the elderly and Beijings distribution of Chinese-made vaccines that are less effective than mRNA jabs. According to official data, only 40% of people over 80 have received a booster dose. Studies show that three doses of Chinas COVID vaccines are needed to provide the same level of protection against severe illness and death from the Omicron COVID variant as two doses of Pfizer or Modernas mRNA vaccines.

China recently pledged to improve vaccination rates among the elderly, which many analysts interpreted as a sign that the country is preparing for a reopening. 

Garcia-Herrero says that China could administer third-dose boosters to 70% of those over 80 by the end of the year if they really speed up, in which case the country might open up right away. But even in that scenario, she warns, many people would probably die.

China could report as many as 20,000 daily deaths from COVID-19 in the spring if it continues to reopen at its current pace, according to models from Wigram Capital Advisors, a macroeconomic advisory group.

A surge in COVID cases, deadly or not, will hamper Chinas economy, even as Beijing loosens COVID controls. Ordinary Chinese people, worried about catching the coronavirus, will likely isolate and reduce consumer spending until the outbreak subsides. And those who do catch COVID will stay home from work as they recover, lowering output and disrupting operations. Lots of people will get sick, which could result in factory closures or facilities being unable to run at full capacity, Zhang Zhiwei, chief economist for Pinpoint Asset Management, told the South China Morning Post.

Even Morgan Stanleys more optimistic research note on Monday warned of a bumpy recovery. There will be lingering containment measures, and possibly some zigzagging, during the initial phase of reopening, wrote Robin Xing, the banks chief China economist.

The combination of rising cases, some regions loosening policies, the winter flu season, and the upcoming Lunar New Year when hundreds of millions of people typically travel makes it difficult to predict how cases, COVID restrictions and mobility may evolve in the coming months, Hui Shan, chief China economist for Goldman Sachs, wrote in a note on Sunday. 

And a surge of cases might lead to public discontent against a COVID-zero exit from those worried about the surge in cases caused by reopening, warns Garcia-Herrero.

Public blowback may trigger greater volatility and lower growth for the first half of the year. Goldman Sachs predicted in November that Chinas economy might grow just 2% in Q2 2023, before rebounding to 10% GDP growth the following quarter as people get used to living with COVID.

Hong Kongs experience earlier this year is an example of how an uncontrolled outbreak in a COVID-zero territory can wreak havoc on an economy. After two years of isolation and low case counts, the semi-autonomous Chinese city suffered a massive outbreak between February and April of this year. Low vaccination rates among the citys elderly population led to 9,100 deaths in the first four months of the year, making the outbreak the most deadly in the developed world.

Hong Kongs outbreak also crashed the citys economy. GDP sank by 4% in the first quarter, compared to the same period a year earlier. Consumer spending and investment also fell by 5.5% and 8.4% year-on-year, respectively. 

The city still hasnt fully recovered. The Hong Kong government now expects an economic contraction of 3.2% for 2022. 

An outbreak in mainland China that mimics Hong Kongs would be massive given the mainlands size. Goldman Sachs predicts millions of daily new cases for a few months, which would be orders of magnitude more than the highest number the country has witnessed thus far.

With Warnocks second runoff victory in as many years, Democrats will have a 51-49 Senate majority, gaining a seat from the current 50-50 split with John Fettermans victory in Pennsylvania. There will be divided government, however, with Republicans having narrowly flipped House control.

In last months election, Warnock led Walker by 37,000 votes out of almost 4 million cast, but fell short of the 50% threshold needed to avoid a runoff. Walker, a football legend who first gained fame at the University of Georgia and later in the NFL in the 1980s, was unable to overcome a bevy of damaging allegations, including claims that he paid for two former girlfriends abortions.

Democrats Georgia victory solidifies the states place as a Deep South battleground two years after Warnock and fellow Georgia Democrat Jon Ossoff won 2021 runoffs that gave the party Senate control just months after Biden became the first Democratic presidential candidate in 30 years to win Georgia. Voters returned Warnock to the Senate in the same cycle they reelected Republican Gov. Brian Kemp by a comfortable margin and chose an all-GOP slate of statewide constitutional officers.

Ill work with anyone to get things done for the people of Georgia, Warnock, the states first Black senator, said throughout his campaign, a nod to the states historically conservative lean and his need to win over GOP-leaning independents and at least some moderate Republicans in a midterm election year.

Warnock, 53, paired that argument with an emphasis on his personal values, buoyed by his status as senior pastor of Atlantas Ebenezer Baptist Church, where civil rights icon Martin Luther King Jr. once preached.

Walkers defeat bookends the GOPs struggles this year to win with flawed candidates cast from Trumps mold, a blow to the former president as he builds his third White House bid.

Democrats new outright majority in the Senate means the party will no longer have to negotiate a power-sharing deal with Republicans and wont have to rely on Vice President Kamala Harris to break as many tie votes.

About 1.9 million runoff votes were cast by mail and during early voting, while the state was on track for a robust Election Day, with state officials estimating an additional 1.4 million votes cast slightly more than in the November midterm and the 2020 election.

Early and mail voting did not reach the same levels as years past, and it was likely the total number of votes cast would be less than the 2021 Senate runoff election. Voting rights groups point to changes made by state lawmakers after the 2020 election that shortened the period for runoffs, from nine weeks to four, as a major reason for the decline in early and mail voting.

Elections officials reported few problems processing early votes and tabulating ballots cast Tuesday, but there were some delays. In south Georgias Lowndes County, two poll workers were in a car accident on the way to the county elections office with the memory cards from one precincts polling machines. A Lowndes official said a member of the local elections board went to the accident site to retrieve the memory cards so tabulations could continue.

Walker benefited during the campaign from nearly unmatched name recognition from his football career, yet was dogged by questions about his fitness for office and allegations of hypocrisy.

A multimillionaire businessman, Walker inflated his philanthropic activities and business achievements, including claiming that his company employed hundreds of people and grossed tens of millions of dollars in sales annually, even though records indicate he had eight employees and averaged about $1.5 million a year. He has suggested that hes worked as a law enforcement officer and graduated college, though he has done neither.

He was accused by two former girlfriends of encouraging and paying for their abortions, despite supporting an outright national ban on the procedure during the campaign. He denied both womens claims.

He was also forced to acknowledge during the campaign that he had fathered three children out of wedlock whom he had never before spoken about publicly. The mother of one of those children told The Daily Beast that Walker had not seen his young son since January 2016 and had to be taken to court for child support in direct conflict with Walkers years spent criticizing absentee fathers and his calls for Black men, in particular, to play an active role in their kids lives.

His ex-wife said Walker once held a gun to her head and threatened to kill her. He has never denied those specifics and wrote of his violent tendencies in a 2008 memoir that attributed the behavior to mental illness.

As a candidate, he sometimes mangled policy discussions, attributing the climate crisis to Chinas bad air overtaking good air from the United States and arguing that diabetics could manage their health by eating right, a practice that isnt enough for insulin-dependent diabetic patients.

On Tuesday, Atlanta voter Tom Callaway praised the Republican Partys strength in Georgia and said hed supported Kemp in the opening round of voting. But he said he cast his ballot for Warnock because he didnt think Herschel Walker has the credentials to be a senator.

I didnt believe he had a statement of what he really believed in or had a campaign that made sense, Callaway said.

Walker, meanwhile, sought to portray Warnock as a yes-man for Biden. He sometimes made the attack in especially personal terms, accusing Warnock of being on his knees, begging at the White House a searing charge for a Black challenger to level against a Black senator about his relationship with a white president.

My opponent is not a serious person, Warnock said during the runoff campaign. But the election is very serious. Dont get those two things confused.

Warnock promoted his Senate accomplishments, touting a provision he sponsored to cap insulin costs for Medicare patients. He hailed deals on infrastructure and maternal health care forged with Republican senators, mentioning those GOP colleagues more than he did Biden or other Washington Democrats.

Warnock distanced himself from Biden, whose approval ratings have lagged as inflation remains high. After the general election, Biden promised to help Warnock in any way he could, even if it meant staying away from Georgia. Bypassing the president, Warnock decided instead to campaign with former President Barack Obama in the days before the runoff election.

Walker, meanwhile, avoided campaigning with Trump until the campaigns final day, when the pair conducted a conference call Monday with supporters.

Walker joins failed Senate nominees Dr. Mehmet Oz of Pennsylvania, Blake Masters of Arizona, Adam Laxalt of Nevada and Don Bolduc of New Hampshire as Trump loyalists who ultimately lost races that Republicans once thought they would or at least could win.

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