Ukrainian economy will be halved in 2022 – Forecast

Ukraine’s economy will take at least 15 years to recover to pre-war levels, according to a new forecast that lays bare the economic damage inflicted on the country.

The country’s economy will shrink by nearly half this year, the Economist Intelligence Unit said in a new report on Wednesday.

“We believe Ukraine’s economy will register a 46.5% recession this year, amid the loss of life, destruction of infrastructure and bleak prospects for the country’s reconstruction,” its analysts said.

Nearly 4 million Ukrainians have already fled the country, and about a quarter of the country’s 40 million people have been displaced by the war as a whole. In addition to the thousands of civilian deaths, kyiv estimates that Russia has inflicted more than $600 billion in economic damage on the country through aggressive bombing of major cities and infrastructure.

The Ukrainian economy will take at least 15 years – until 2037 – to return to its pre-war level.

Russia’s GDP is expected to contract by around 10% this year amid heavy Western sanctions and an exodus of Western businesses. Its economy will take at least three years to regain its pre-war size, the EIU said.

Other forecasts predict that the Russian economy could fall by 15%, wiping out 15 years of economic growth.

“The sanctions have sent the rouble plunging, fueling inflation and weighing on household purchasing power,” the analyst said. Living standards are expected to fall by more than 10% this year, with inflation expected to exceed 20% in the coming weeks.

“Investment will sink amid huge capital outflows and plummeting confidence. Falling oil exports, caused by some traders shunning Russian oil and some countries imposing a ban on Russian energy imports, will further reduce growth,” he added.

“Russia will seek support from China, but this will only partly compensate for the departure of Western firms.”

Christi C. Elwood