Heat olive oil in a large pot over medium-high heat and brown the beef on all sides, then remove and set aside.
Add the onion, carrots, and celery to the pot and cook for 5 minutes, stirring occasionally.
Stir in the garlic and cook for 1 additional minute.
Add the tomato paste and cook for 2 minutes, stirring to coat the vegetables.
Pour in the tomato sauce, sugar, beef broth, bay leaf, salt, pepper, and the browned beef.
Bring the mixture to a boil, then reduce the heat to low and simmer for 1 hour.
Add the potatoes and continue simmering for 30 minutes or until tender.
If desired, stir together the cornstarch and water, then mix it into the stew and simmer for 2–3 minutes to thicken.
Remove the bay leaf and serve the stew hot in a bowl on its own or over rice.