New “very sad” manifestations for the Ukrainian economy

Share This Post

- Advertisement -

The World Bank released a dire economic forecast for Ukraine on Sunday due to Russia’s aggression, which is affecting the entire region. He also warned of a darker scenario if the fighting breaks out.

- Advertisement -

According to the latest projection from this Washington -based organization, Ukraine’s gross domestic product will fall by 45.1% this year, while Russia’s will fall by 11.2%.

- Advertisement -

For Ukraine, this is a worse fall than the 10% to 35% expected last month by the International Monetary Fund (IMF) or the 20% announced on March 31 by the European Bank for reconstruction and development (EBRD. ).

The whole region is suffering the economic consequences of this war that began on February 24, which caused the flight of more than four million Ukrainians to Poland, Romania and Moldova and which caused the prices of cereals and ‘energy .

The World Bank expects a 4.1% GDP contraction this year for all emerging and developing countries in Europe and Central Asia, whereas before the war it expected 3% growth. This is worse than the pandemic-induced recession in 2020 (–1.9%).

Only Eastern Europe should see it gross domestic product fall of 30.7% against expected growth of 1.4% before the invasion.

The results of our analysis were very poorsaid Anna Bjerde, the World Bank vice-president that manages this region, in a conference call.

This is the second major shock to hit the region’s economy in two years and it comes at a very precarious period as many economies are still struggling to recover from the pandemic.

A quote from Anna Bjerde, Vice President of the World Bank, Europe and Central Asia Region

As for Eastern Europe, it is also subject to sanctions imposed on Belarus because of its role in the war.

The report’s authors note that Moldova is likely to be one of the countries hardest hit by the conflict, not only because of its geographical proximity to the war but also because of its inherent weaknesses as a small economy close by. associated with the two countries. , Ukraine and Russia.

In addition, this part of Europe relies on natural gas to meet its energy needs.

The worst outlook, however, is for Ukraine, as government tax revenues have dwindled, businesses have closed or are only partially functioning and trade in goods has been severely disrupted.

For example, Anna Bjerde said that grain exports have become impossible in large parts of the country due to severe infrastructure damage.

Flames and a thick column of black smoke rose from a refinery.

The development organization is also concerned about rising poverty. The proportion of the population living on US $ 5.50 a day is expected to increase from 1.8% in 2021 to 19.8% this year, according to World Bank calculations.

In developing all its forecasts, the Bank assumes that the war will continue how many months. But he acknowledges that these prophecies are subject in great uncertaintythe real impact of the war on the euro zone is unknown.

Therefore, the organization is also considering a more pessimistic scenario considering a stronger impact on the euro zone, an increase in sanctions and a shock to financial confidence.

the gross domestic product of the region will contract nearly 9%, more than the 5% suffered during the global financial crisis in 2009 and more than the 2% recession caused by the pandemic in 2020, the World Bank recalled.

In this scenario, the plunge would be 20% for Russia and 75% for Ukraine.

Source: Radio-Canada

- Advertisement -

Related Posts