Conflicts & War

Ukraine’s economy could shrink 45% this year: World Bank

Washington, Apr 10 (EFE).- Ukraine’s economy would fall by up to 45 percent this year due to the Russian invasion, while Russia’s could shrink 11 percent, as Belarus and Moldova are set to enter a recession, the World Bank said Sunday.

The Washington-based institution published an update of its economic forecasts for the region saying the war in Ukraine is affecting economies worldwide, with a particular impact on developing countries in Europe and Central Asia.

The World Bank calculates said the regional economy would shrink 4.1 percent this year, a notable change compared to its pre-war forecast, which pointed to 3 percent growth in Europe and Central Asia.

This recession would be “twice as big as that caused by the pandemic,” and caused by the coronavirus crisis and “economic blows” from the war, the report read.

The bank said only the economies of Ukraine, Russia, Belarus, Moldova, Kyrgyzstan and Tajikistan would contract.

“The rest will grow at an anemic pace,” said the report.

By 2023, Europe and Central Asia’s gross domestic products are expected to expand “a timid 2.5 percent,” the document said.

In Ukraine’s case, the World Bank said its economy may contract 45.1 percent this year, adding that the magnitude of this recession “will depend on the duration and intensity of the war.”

This estimate exceeds the one released less than a month ago by the International Monetary Fund, which said that if the conflict continues, Ukraine’s economy could fall by up to 35 percent this year, due to mass migration and destruction of its productive capacity.

“Ukraine needs massive financial support immediately to keep its economy and government going and to support Ukrainian citizens, who are suffering and dealing with an extreme situation,” said World Bank Vice President for Europe and Central Asia Anna Bjerde.

The World Bank said Russia’s economy would contract “up to 11.2 percent in 2022,” mired in a “deep recession” as a result of “unprecedented sanctions” imposed by the United States and its allies in Europe and elsewhere.

Belarus would see its economy shrink by 6.5 percent and Moldova by 0.4 percent, while Poland and Romania, also neighbors of Ukraine, would grow by 3.9 percent and 1.9 percent, respectively.

Since the war began, the World Bank has launched an emergency financing package of $ 925 million for Ukraine, within the framework of an assistance plan it is still preparing and would amount to $ 3 billion. EFE


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