Washington, Apr. 11, (dpa/GNA) - Ukrainian economic output is expected to almost halve this year compared to 2021 due to the ongoing Russian invasion, according to a new World Bank report released on Sunday.
Year-on-year gross domestic product (GDP) is expected to decline by about 45.1%, the bank said, adding that the final extent of the country’s economic decline will ultimately depend on the “duration and intensity of the war.”
The invasion began on February 24. In January, the World Bank had forecast economic growth of about 3% for Ukraine this year. The current projected economic fall would be twice as bad as the contraction that hit the country in 2020 due to the coronavirus pandemic.
“The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure,” said Anna Bjerde, World Bank vice president for the Europe and Central Asia region.
For example, based on World Bank standards of $5.50 available a day per person as the cut-off for poverty, the percentage of the Ukrainian population living in poverty is expected to shoot up from 1.8% before the war to 19.8%, it warned.
Bjerde said the country needs aid immediately to stabilize its economy and help its people.
The report noted that the war has also ruined much of Ukraine’s productive infrastructure, including railways, bridges, harbours and streets, meaning economic activity has become impossible in large parts of the country. Even agricultural production will be disrupted, which means the country’s economic potential could even degrade further.
That is problematic for the world because of the large number of commodities exported from Ukraine.
“The Ukraine war and the pandemic have once again shown that crises can cause widespread economic damage and set back years of per capita income and development gains,” said Asli Demirgüç-Kunt, World Bank chief economist for Europe and Central Asia.
The government in Kiev estimates that Ukraine has suffered damage worth up to a trillion dollars as a result of the Russian invasion, UNIAN news agency cited Deputy Economics Minister Olexander Griban saying at a government meeting on Sunday.
Griban described the losses as simply “colossal,” noting that the list is not yet complete.
“It’s billions of dollars in damage, possibly up to a trillion dollars,” Griban said, without further substantiating his figures.
The sum is composed of damage to infrastructure, health care and education. “And then there are other levels of casualties – state, municipal and private,”Griban continued. “We have a lot of work to do on reconstruction.”
The Ukrainian government has only just provided initial funding for urgent clean-up and repair work in the areas liberated from Russian occupation on Sunday. Ukrainian Prime Minister Denys Shmyhal spoke of a sum of one billion hryvnia (34 million dollars) needed for urgent repairs.
The Russian invasion of its neighbour will also have an impact on Russia’s economy, largely because of the sanctions piled on it by Western countries to protest the attack.
The bank said it expects Russia’s economy to shrink 11.2% year on year, with local demand shrinking, jobs disappearing, incomes sinking and poverty, inflation and supply chain disruptions all on the rise. In January, the bank had still forecast subdued growth for Russia this year.
Other countries with strong economic ties to Russia and Ukraine – such as Belarus, Kyrgyzstan, Moldova and Tajikistan – will also suffer as trade dwindles and citizens living in Russia find it harder to come up with funds to send back home.
Such transfers make up 30% of the economy in countries like Kyrgyzstan and Tajikistan. They also rely on key imports from Russia and Ukraine, not the least of which is wheat.
GNA