Washington, Mar 14 (EFE).- Ukraine’s economy could contract by as much as 35 percent this year if the ongoing war sparked by Russia’s invasion turns into a prolonged conflict, the International Monetary Fund said on Monday, specifically warning of the risk posed by mass migration and loss of physical capital stock.
The IMF’s forecast was contained in a new report on Ukraine’s economy that acknowledged “massive uncertainty” about the economic impact of the war.
“A deep recession and large reconstruction costs are to be expected,” the document prepared by IMF staff said, citing a steep drop in demand and supply chain disruptions, among other factors.
Even if the war were to end in the short term, the Fund projects that Ukraine’s gross domestic product will shrink by at least 10 percent this year.
But based on data from other war-torn countries like Iraq, Lebanon, Syria and Yemen, the contraction of Ukraine’s annual output of goods and services could end up being in a range of between 25 percent and 35 percent.
“Increasing loss of physical capital stock and mass migration would result in a significantly more pronounced output contraction, a collapse in trade flows, further diminished tax collection capacity and a greater deterioration in the fiscal and external positions,” the document read.
Last week, the IMF’s Executive Board approved $1.4 billion in emergency financing support to Ukraine at Kyiv’s request.
The goal is to “help meet urgent financing needs and mitigate the economic impact of the war,” that Washington DC-based international financial institution said.
More than 2.8 million refugees are estimated to have fled Ukraine to neighboring countries since Russia launched its large-scale invasion on Feb. 24, according to the latest figures from the Office of the United Nations High Commissioner for Refugees (UNHCR), which said more than half of those people (1.7 million) have fled to neighboring Poland.
Smaller number of refugees have fled to Hungary (255,000) and Slovakia (204,000), according to the UNHCR, which also says more than 2 million people are estimated to be internally displaced in Ukraine. EFE