Washington According to estimates by the World Bank, Ukraine’s economic output will almost halve this year as a result of the Russian war of aggression. According to the World Bank forecast on Sunday, gross domestic product (GDP) will fall by around 45 percent compared to the previous year. However, the organization qualified that “the extent of the economic slump” would depend on “the duration and intensity of the war”. In January, i.e. before the start of the war at the end of February, the World Bank had forecast economic growth of around 3 percent for Ukraine.
“Many aspects of Ukraine’s economy are collapsing,” the World Bank said. The impact of war, flight and displacement on poverty in Ukraine is also likely to be “devastating,” it said. Measured against the statistical poverty line of $5.50 a day for countries with comparable incomes, the proportion of Ukraine’s population living in poverty is likely to skyrocket from 1.8 percent to 19.8 percent, the World Bank warned.
“The scale of the humanitarian crisis triggered by the war is staggering,” said World Bank Vice President for Europe and Central Asia Anna Bjerde. Ukraine needs “immediate massive financial support” to stabilize the economy and help the citizens, stressed Bjerde.
Economic forecasts for Ukraine are currently associated with a very high degree of uncertainty because nobody can predict how the war will continue – and how long the fighting will last. However, the trend in the forecasts should be meaningful.
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“The war has destroyed a significant amount of productive infrastructure – including rails, bridges, ports and roads – making economic activities impossible in much of these areas,” the World Bank said. Trade has ground to a halt, as have most of the exports that would normally be shipped through Black Sea ports. Agriculture, an important branch of the economy in Ukraine, has also been interrupted in many places because of the war. According to the World Bank, it is therefore to be expected that the consequences of the conflict will continue to weaken Ukraine’s economic potential beyond the year.
The Russian economy, on the other hand, is likely to shrink by 11.2 percent this year as a result of the unprecedented sanctions imposed by Western nations, according to the World Bank. Domestic demand will fall as jobs are lost, incomes fall, poverty, inflation and supply chain disruptions increase, the World Bank said. In January, the bank still expected low economic growth for Russia.
As a result of the war, the economy will also contract in other countries in the region this year, including Belarus, Moldova, Kyrgyzstan and Tajikistan. Trade flows are interrupted or disrupted, and citizens of these countries living in Russia are likely to send less money home to their families. In some countries – such as Kyrgyzstan and Tajikistan – such remittances make up almost 30 percent of economic output, it said. The countries of the region are also dependent on Russia and Ukraine for a large part of their wheat imports.
More: Willi Prettl set up a job platform for refugees with Alexander Wittker. In an interview, they explain why companies should support Ukraine now.