The World Bank predicts that the Ukrainian economy will shrink by more than 45% this year due to the invasion of Russiawhich has shut down half of the country’s businesses, drowned out imports and exports, and damaged a lot of critical infrastructure.
Meanwhile, unprecedented financial and export sanctions imposed by Western allies in response to the war plunging Russia into a deep recessioncutting more than a tenth of its economic growth, the World Bank said in a report on Sunday.
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The war is expected to inflict twice as much economic damage on Europe and Central Asia as the war Covid-19 pandemic he did so, the Washington-based lender said in its economic report “The War in the Region.” In addition to Ukraine, it focuses on Central and Eastern Europe, the former Soviet republics, the Balkan countries, and Turkey.
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“The magnitude of the humanitarian crisis triggered by the war is staggering,” said Anna Bjerde, the World Bank’s vice president for Europe and Central Asia. “The Russian invasion is taking a heavy toll on the Ukrainian economy and has inflicted enormous damage on infrastructure.”
The report said that economic activity is impossible in “wide areas” in Ukraine because infrastructure such as roads, bridges, ports and railways have been destroyed.
“The basket of the world” overturned
Ukraine plays an important role as global supplier of agricultural exports such as wheat but that is now in question because planting and harvesting have been interrupted for the war, the report said. The war has cut off access to the Black Sea, a key route for exports, including 90% of grain shipments from Ukraine, he said.
“The war is having a devastating impact on human life and is causing economic destruction in both countries, and will cause significant economic losses in the region of Europe and Central Asia and the rest of the world,” the report said.
Belarus, Kyrgyzstan, Moldova and Tajikistan are also expected to enter a recession this year, while economic growth projections have been cut for other economies in the region due to the domineering effects of the war.
The World Bank says the humanitarian catastrophe is the biggest initial shock wave of the war and will probably be its longest-lasting legacy, as the wave of refugees fleeing Ukraine is expected to “reduce crises previous “.
More than 4 million people have fled Ukrainewith more than half go to Poland and others targeting countries such as Moldova, Romania, and Hungary. An additional 6.5 million have been internally displaced. These figures are expected to increase as the war drags on, the World Bank said.
The report issued a stern warning that “war will increase poverty in the region due to the recession and food price inflation.”
Beyond the humanitarian crisis, the lender said that “the war is also giving a major blow to the global economy through multiple channels.”
War and sanctions have riots on world trade routes and increased shipping and insurance costs, “which raises tensions in global value chains,” the report said, noting that industries are affected. include food, carsconstruction, petrochemicals and transportation.
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