Ukraine’s economy will shrink by 45% and Russia’s by 11% in 2022, World Bank says
- Ukraine’s economy is expected to shrink by 45% this year, while Russia’s will shrink by 11%, the World Bank said.
- In its spring report, the institution said the “catastrophic” war would cause more than $100 billion in damage to Ukraine’s infrastructure.
- He also said the conflict would hit Eastern Europe’s economy hard and risk causing a major slowdown in global growth.
The “catastrophic” war in Ukraine will cause the country’s economy to shrink by 45% this year and Russia’s by 11%, the World Bank has predicted.
The Russian invasion destroyed infrastructure across Ukraine and led to severe shortages of water, food, heating and energy, the international financial institution said. mentioned Sunday in a new report.
He estimated that infrastructure damage would likely be well over $100 billion, or about two-thirds of Ukraine’s gross domestic product in 2019. Half of Ukraine’s businesses have closed, while the other half are operating well in below capacity, he said.
The World Bank said Ukraine’s GDP – the most common measure of the size of an economy – would likely shrink by 45.1% in 2022. However, it said the forecast was highly uncertain and could be higher if the war lasts longer, or less if the conflict ends soon.
“Russia’s invasion of Ukraine has caused a dire humanitarian toll and severe economic contraction,” the World Bank said in its spring report.
“Ukraine needs massive financial support immediately as it struggles to keep its economy going and the government operating to support the suffering Ukrainian citizens facing an dire situation.”
Russia’s war will also seriously harm the country’s domestic economy, the World Bank said. He said the economy has already plunged into a deep
and projected GDP would contract by 11.2% in 2022.
The World Bank said Western sanctions against Russia would do much of the damage. The United States and its allies cut off the Russian central bank from most of its foreign currency reserves; banks, corporations and oligarchs sanctioned; and reduced trade with the country.
“The sanctions have weakened Russia’s important macroeconomic buffers and triggered trade, financial and confidence shocks,” the report said.
The World Bank also said the economies of countries around Ukraine and Russia would be hit hard, while the war could trigger a sharp global slowdown. The conflict has triggered a sharp rise in food and energy prices, which is likely to be particularly destabilizing for developing economies, according to the report.
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