Ukraine’s economic output is expected to contract a staggering 45.1% this year after the Russian invasion closed business, reduced exports and made economic activity impossible in large swaths of the country, the World Bank said on Sunday.
The World Bank also predicts that Russia’s GDP in 2022 will fall by 11.2% due to punitive financial sanctions imposed by the United States and its Western allies on Russian banks, state-owned enterprises and other institutions.
The World Bank’s “War in the Region” economic update said the Eastern European region, which includes Ukraine, Belarus and Moldova, is expected to show a 30.7% GDP contraction this year, due to shocks from the war and trade disruption. .
Growth in 2022 in the Central European region, including Bulgaria, Croatia, Hungary, Poland and Romania, will slow to 3.5% from 4.7% previously forecast, due to the influx of refugees, higher commodity prices and deterioration confidence, undermining demand.
For Ukraine, the World Bank report estimates that more than half of the country’s businesses are closed, while others are operating well below normal capacity. The closure of Ukraine’s Black Sea shipping has cut about 90% of the country’s grain exports and half of its total exports.
The World Bank said the war has made economic activity impossible in many areas and is disrupting agricultural planting and harvesting operations.
Estimates of infrastructure damage in excess of $100 billion as of early March — about two-thirds of Ukraine’s 2019 GDP — are well out of date “as the war continues and causes more damage.”
The bank said the 45.1% contraction estimate excludes the impact of the destruction of physical infrastructure, but said that would hurt future economic output, along with the outflow of Ukrainian refugees to other countries.
The World Bank stressed that the magnitude of Ukraine’s contraction is “subject to a high degree of uncertainty” about the duration and intensity of the war.
Source: CNN Brasil
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