Ukraine’s economic output is likely to shrink by a staggering 45.1% this year as Russia’s invasion closes business, cuts exports and makes economic activity impossible in much of the country, the World Bank said.
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 Economic Update “War in the Region” indicates that the Eastern European region – including Ukraine, Belarus and Moldova – is expected to show a 30.7% contraction in GDP this year due to war shocks and trade disruptions.
Growth in 2022 in the Central European region – including Bulgaria, Croatia, Hungary, Poland and Romania – will be reduced to 3.5% from 4.7% previously due to the influx of refugees, higher commodity prices and deteriorating trust, which hurts demand.
For Ukraine, the World Bank report estimates that more than half of the country’s enterprises are closed, while others operate at well at normal capacity. Ukraine’s closure of Black Sea shipping has cut off about 90 per cent of the country’s grain exports and half of its total exports.
The World Bank has said the war has made economic activity impossible in many areas and disrupts planting and harvesting operations.
Estimates of infrastructure damage in excess of $ 100 billion by early March – about two-thirds of Ukraine’s GDP in 2019 – are rather outdated, “as the war rages and causes further damage.”
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