WASHINGTON – Ukraine’s economic output is likely to shrink by 45.1% this year as Russia’s invasion has cut off trade, reduced exports and hampered economic activity across much of the country, the World Bank (WB) said Sunday.
The World Bank has forecast that Russia’s gross domestic product (GDP) output will fall by 11.2% by 2022 due to sanctions imposed by the United States and its Western allies on Russian banks, state-owned enterprises and other entities.
According to the World Bank’s “War on the Region” economic update, the Eastern European region, which includes Ukraine, Belarus and Moldova, is projected to shrink by 30.7% of GDP this year, due to the impact of the war and trade disruptions.
Growth in 2022 in Central Europe, including Bulgaria, Croatia, Hungary, Poland and Romania, will decline from 4.7% to 3.5% earlier due to declining refugee arrivals, higher commodity prices and eroded confidence in demand.
For Ukraine, the World Bank report estimates that more than half of the country’s businesses are closed, while others are doing well under normal capacity. Black Sea shipping from Ukraine has cut off about 90% of the country’s grain exports and halved its total exports.
The World Bank says the war has in many cases made economic activity impossible and hampered agricultural planting and harvesting activities.
Infrastructure damage estimates exceeded $ 100 billion at the beginning of March – about two-thirds of Ukraine’s 2019 GDP – outdated “since the war went on and caused further damage.”
The bank said the 45.1% contraction estimate excludes the impact of the destruction of physical infrastructure, but said it would hurt future economic output with the outflow of Ukrainian refugees to other countries.
The World Bank says Ukraine’s level of contraction is “subject to high levels of uncertainty” over the duration and intensity of the war.
A negative situation in the report, which reflects a further push in commodity prices and the loss of confidence in financial markets due to the escalation of the war, could result in a contraction of 75% of Ukraine’s GDP and 20% of Russia’s output.
This scenario will lead to a 9% contraction in emerging markets and developing economies in the World Bank’s Europe and Central Asia region – more than double the baseline forecast.
“The Russian aggression has hit Ukraine’s economy hard and caused severe damage to its infrastructure,” said Anna Bajrad, the World Bank’s vice president for Europe and Central Asia.
“Ukraine urgently needs massive financial assistance because it is struggling to keep its economy afloat and the government is running to support the citizens of Ukraine who are suffering and dealing with the extreme situation.”
The World Bank has already mortgaged about 23 923 million in loans and grants to Ukraine and is preparing more than $ 2 billion in aid packages.
“Rapid IMF and World Bank assistance has given Ukraine the opportunity to pay the salaries of civilians, soldiers, doctors and nurses, as well as meet its external debt obligations,” said Janet Yellen, the US Treasury secretary who oversees US controlling shares in the World Bank. , U.S. lawmakers said during a hearing last week. – Reuters