The World Bank has warned Ukraine’s economy will shrink by half this year because of the Russian invasion.
In an economic update of the region, the World Bank said Sunday that Ukraine’s economy is expected to shrink by an estimated 45.1 percent this year, “although the magnitude of the contraction will depend on the duration and intensity of the war.”
Anna Bjerde, World Bank Vice President for the Europe and Central Asia region, said the “magnitude of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure. ” She added:
Ukraine needs massive financial support immediately as it struggles to keep its economy going and the government running to support Ukrainian citizens who are suffering and coping with an extreme situation.”
World Bank forecasts that Russia’s economy will contract by 11.2 percent in 2022 following tough sanctions.
Other economies affected: The bank also warned that emerging and developing economies in Europe and Central Asia will be hit hard.
“In addition to Russia and Ukraine, Belarus, Kyrgyz Republic, Moldova and Tajikistan are projected to fall into recession this year, while growth projections have been downgraded in all economies due to spillovers from the war, weaker-than-expected growth in the euro area, and commodity, trade and financing shocks.”
Wheat prices rise: Russia and Ukraine account for about 40percent of wheat imports in the region and about 75% or more in Central Asia and the South Caucasus, according to the World Bank.
“The war has pushed wheat prices higher as it disrupts Ukraine’s planting and harvest seasons, including for other crops such as corn, barley, and sunflowers; destroys critical fields, stores, infrastructure, and production, especially in eastern Ukraine; and halts shipping from the Black Sea, from which about 90 percent of Ukraine’s grains are exported,” the World Bank said in the report.
Russian ports are operating, but insurance costs have soared due to the conflict and inhibited charges from leaving Russia, World Bank noted.