Apr 12, 2022 12:25 p.m
The World Bank, which is affiliated with the UN, makes a gloomy forecast: According to the organization, the Ukraine war will shrink Ukraine’s gross domestic product by almost half and Russia’s by 11.2 percent. And that’s not even the “negative scenario”.
The World Bank has analyzed the economic devastation caused by the Russia-Ukraine conflict and is now forecasting double-digit GDP declines in the two countries and recessions in neighboring Belarus and Moldova.
The hardest hit is Ukraine, whose economy will shrink by 45.1 percent by 2022, according to the UN Bank on Sunday in its updated forecast for the region. Russia, which has been hit with unprecedented economic sanctions by the US and its Western allies, will face an estimated 11.2 percent contraction in GDP.
The Washington-based bank said some countries in the region would be forced to seek outside help to avoid defaulting on their current debts. Emerging markets in Europe and Central Asia would suffer an economic contraction of 4.1 percent this year, the lender said, revising its pre-conflict forecast of average GDP growth of 3 percent.
“The war has devastated human life and caused economic destruction in both countries,” according to the World Bank. She forecast “significant economic losses in the Europe and Central Asia region and the rest of the world”.
Two of Ukraine’s immediate neighbors, Kyrgyzstan and Tajikistan, are also forecast to slide into recession this year as the economic impact of the crisis spills over to them, the bank said. The estimated economic contraction in the region will be twice the drop in GDP in 2020, when the coronavirus crisis disrupted economic activity.
The impact of the anti-Russia sanctions would impact the entire global economy, hitting the former Soviet republics particularly hard as trade would be disrupted, the forecast said.
“The effects of the war are cascading through the region’s strong trade, financial and migratory ties, causing significant economic damage to neighboring countries.”
However, according to the World Bank, that is not yet the “negative scenario”. This occurs if the conflict drags on. This could lead to further sanctions and a further increase in commodity prices. In this case, the organization estimates that Russia’s GDP would fall by an estimated 20 percent and Ukraine’s by 75 percent.
Last month, the bank announced $925 million in additional funding for Ukraine to provide humanitarian assistance. On Friday, the organization warned of a global food crisis as dozens of countries would impose export restrictions to preserve their supplies.
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