Double that of Covid: this will be the economic impact of the war in Ukraine
Photo by Markus Spiske on Unsplash
The Ukrainian tragedy will have an enormous economic cost, starting with the economy of the Old Continent, according to the forecasts of the World Bank . His forecast begins with a drop in Ukraine's GDP of 45.1%, practically a halving due to the destruction and occupation of part of the territory. However, the damage is not limited only to this territory.
Before the war the institution expected a growth of 3%, but these values. In a recent report, Anna Bjerde, World Bank Vice President for the Europe and Central Asia Region, said the extent of the contraction will depend on the length and intensity of the war.
“The scale of the humanitarian crisis unleashed by the war is astounding. The Russian invasion is dealing a severe blow to the Ukrainian economy and has inflicted enormous damage on infrastructure, ”he said.
A continuation of the war would cause even greater falls in GDP, with the bank expecting a downward contraction of 20% of Russian GDP and 75% of Ukrainian GDP.
Not only that: the war is set to inflict double the economic damage in Europe and Central Asia compared to the pandemic in 2020.
In addition to Russia and Ukraine, neighboring Belarus, the Kyrgyz Republic, Moldova and Tajikistan are expected to fall into recession this year. Growth projections have been downgraded in all economies due to the fallout from the war.
Since the invasion began, some 3 million people have lost their jobs, while preliminary estimates by the Ukrainian government suggest that the economy may have already lost about $ 565 billion.
With millions of Ukrainians fleeing the country or joining the fight against Russia, the workforce has shrunk dramatically, making it difficult to maintain the wartime economy. More than 4 million people have fled Ukraine, mainly to Poland, with another 6.5 million internally displaced.
The black sea shipping blockade from Ukraine has cut about 90% of the country's grain exports and half of its total exports. As a result, global food prices have risen, with Ukraine being the world's largest exporter of sunflower oil, followed by Russia. Overall, Ukrainian ports have already experienced a traffic drop of more than 75%
The World Bank says Ukraine needs "immediate massive financial support". The Bank has already sent about $ 1 billion to help the government provide essential services to citizens and has pledged another $ 2 billion in the coming months.
At the same time, the World Bank says Russia has already plunged into a deep recession due to Western sanctions, predicting that the Russian economy will contract 11.2% this year.
The US has banned all Russian imports of oil and gas, and the EU has proposed a plan to make Europe independent of Russian fossil fuels before 2030. However, the EU still pays Russia nearly $ 884 million every day. for energy. This alone equates to nearly 40% of Russia's revenue.
Experts agree that the Russian invasion of Ukraine will have lasting and negative effects on the world economy and that rising global energy and food prices and inflation will affect millions of people.
An absurd war that will spread poverty everywhere, but this time, as with Covid-19, the epicenter will be Europe. What will remain after two consecutive severe crises?
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article The double of Covid: this will be the economic impact of the war in Ukraine comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-doppio-del-covid-questo-sara-limpatto-economico-della-guerra-in-ucraina/ on Thu, 14 Apr 2022 11:30:12 +0000.