Ukraine’s economy will almost halve, says World Bank

Ukrainian ports have already suffered a drop in traffic of more than 75%, while the war has also closed half of the country’s businesses. Photo: Alexander Ermoshenko/Reuters

The World Bank has predicted that the Russian and Ukrainian economies will contract sharply this year due to the current geopolitical conflict.

Ukraine’s economy is expected to collapse by 45.1% in 2022, worse than last month’s forecast of 10-35%, while Russia’s GDP will shrink by 11.2%, the bank said.

Ukraine’s economy is heavily dependent on agriculture, which could be further affected if access to the Black Sea is completely cut off by Moscow.

Ukrainian ports have already suffered a drop in traffic of more than 75%, while the war has also closed half of the country’s businesses.

The Bank added that many neighboring countries will also suffer a greater negative impact due to the conflict, with increased Western sanctions and a financial shock due to the erosion of confidence.

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The Eastern Europe region, comprising Ukraine, Belarus and Moldova, is expected to see a 30.7% contraction in GDP in 2022, due to trade disruption after two years of the COVID pandemic .

In addition, the Kyrgyz Republic, Moldova and Tajikistan are also expected to enter recession this year.

“The war is having a devastating impact on human life and causing economic destruction in both countries, and will cause significant economic losses in the Europe and Central Asia region and the rest of the world,” the Washington-based lender said in a statement. his predictions. .

The World Bank and International Monetary Fund (IMF) will host finance ministers and central bank bosses at their annual spring meetings later this week. They are expected to announce new offers of financial support to countries affected by the invasion.

The bank has sent nearly $1bn (£767m) in aid to Ukraine so far and has pledged another $2bn in the coming months.

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“The scale of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is dealing a severe blow to Ukraine’s economy and inflicting enormous damage to infrastructure,” said Anna Bjerde, Vice President of the Bank. worldwide for Europe and Central Asia.

“The results of our analysis are sobering. Our forecasts show that the Russian invasion of Ukraine has reversed the region’s post-pandemic recovery.

“This is the second major shock to hit the regional economy in two years and comes at a very precarious time for the region, as many economies were still struggling to recover from the pandemic.”

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Christi C. Elwood