War could shrink Ukraine’s economy by 45% this year: NPR
A new update from the World Bank measures the expected toll of Russia’s invasion of Ukraine on the economies of both countries, as well as on developing countries across the region.
Ukraine’s economy could shrink by 45.1% this year, while sanctions against Russia are expected to reduce its economic output by 11.2%, economists say.
“The Russian invasion is a blow to Ukraine’s economy and has inflicted enormous damage to infrastructure,” Anna Bjerde, World Bank Vice President for Europe and Central Asia, said in a press release. . “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.”
More generally, the regional economy of Europe and Central Asia is now expected to contract by 4.1% this year, reversing a pre-war forecast of 3% growth. The World Bank indicates that Belarus, Kyrgyzstan, Moldova and Tajikistan are expected to fall into recession this year, in addition to Russia and Ukraine.
Emerging and developing countries in this region have already been hit hard by the COVID-19 pandemic, the World Bank report notes, adding that “this would be the second contraction in as many years, and twice as large as pandemic-induced contraction in 2020.”
According to the organization, the war has only exacerbated existing concerns about a global economic slowdown, rising debt and inflation, and soaring levels of poverty. The World Bank also warned last week of slowing growth and rising poverty in the Asia-Pacific region, citing the war in Ukraine and other economic shocks.
Asli Demirgüç-Kunt, the World Bank’s chief economist for Europe and Central Asia, said in a press release that the pandemic and the war in Ukraine have once again proven that crises can “roll back years of per capita income and development gains”.
She advises governments in the region to prepare for the fragmentation of trade in the region, to continue to focus on improving energy efficiency and to strengthen their social safety nets to protect the most vulnerable, including refugees.
“The deep humanitarian crisis unleashed by the war was the most pronounced of the initial global shock waves and will likely be one of the most lasting legacies of the conflict,” the World Bank said, adding that support for refugee communities and to their host countries will be particularly critical.
More than 4.5 million people have fled Ukraine as refugees since the first Russian invasion in late February, according to a tracker of ONU.
This story originally appeared in the morning edition live blog.