9/22/22, 11:51 AM
Russian Invasion to Shrink Ukraine Economy by 45 Percent This Year
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APRIL 10, 2022
Russian Invasion to Shrink Ukraine Economy by 45
Percent this Year
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Emerging economies in Europe and Central Asia also hit hard
WASHINGTON, April 10, 2022 – The war against Ukraine and sanctions on Russia are
hitting economies around the globe, with emerging market and developing countries
in the Europe and Central Asia region expected to bear the brunt, says the World
Bank’s latest Economic Update for the region, released today.
The region’s economy is now forecast to shrink by 4.1 percent this year, compared
with the pre-war forecast of 3 percent growth, as the economic shocks from the war
compound the ongoing impacts of the COVID-19 pandemic. This would be the second
contraction in as many years, and twice as large as the pandemic-induced contraction
in 2020.
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. Hit by unprecedented sanctions, Russia’s economy has already plunged
into a deep recession with output projected to contract by 11.2 percent in 2022.
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Russian Invasion to Shrink Ukraine Economy by 45 Percent This Year
“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,” said Anna Bjerde, World Bank Vice President for
the Europe and Central Asia region. “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.”
The war has added to mounting concerns of a sharp global slowdown, surging
inflation and debt, and a spike in poverty levels. The economic impact has
reverberated through multiple channels, including commodity and financial markets,
trade and migration links and adverse impact on confidence.
The war is also hitting hard the emerging and developing economies of Europe and
Central Asia, a region that was already heading for an economic slowdown this year
from the ongoing effects of the pandemic. 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.
Russia and Ukraine account for about 40 percent of wheat imports in the region and
about 75 percent or more in Central Asia and the South Caucasus. Russia is also a
major export destination for many countries, while remittances from Russia are close
to 30 percent of GDP in some Central Asian economies (Kyrgyz Republic, Tajikistan).
“The Ukraine war and the pandemic have once again shown that crises can cause
widespread economic damage and set back years of per capita income and
development gains,” said Asli Demirgüç-Kunt, World Bank Chief Economist for Europe
and Central Asia. “Governments in the region should fortify their macroeconomic
buffers and credibility of their policies to contain risks and deal with potential
fragmentation of trade and investment channels; strengthen their social safety nets to
protect the most vulnerable, including the refugees; and not lose focus on improving
energy efficiency to ensure a sustainable future.”
The deep humanitarian crisis sparked by the war has been the most pronounced of
the initial global shockwaves and will likely be among the most enduring legacies of
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the conflict. The wave of refugees from Ukraine to neighboring countries is anticipated
to dwarf previous crises. As a result, support to host countries and refugee
communities will be critical, and the World Bank is preparing operational support
programs to neighboring countries to meet the increased financing needs from the
refugee flows.
The war-triggered spike in global oil prices also serves to underscore the need for
energy security by boosting energy supply from renewable sources and stepping up
the design and implementation of large-scale energy efficiency measures.
World Bank Group Response to the Ukraine War
The World Bank Group is taking fast action to support the people of Ukraine. Since the
start of Russia’s invasion of Ukraine on February 24, the Bank Group has mobilized an
emergency financing package of $925 million in support for Ukraine. This fastdisbursing support will go to help pay wages for hospital workers, pensions for the
elderly, and social programs for the vulnerable. The rapid financing is part of a $3
billion package of support that the Bank Group is preparing for Ukraine over the
coming months. The invasion has already caused the largest refugee crisis in Europe
since World War II. The Bank Group is looking at how to support refugees in host
countries.
PRESS RELEASE NO: 2022/ECA/79
Contacts
Washington
Carl Hanlon
+1 (202) 460-8526
chanlon@worldbank.org
https://www.worldbank.org/en/news/press-release/2022/04/10/russian-invasion-to-shrink-ukraine-economy-by-45-percent-this-year
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Russian Invasion to Shrink Ukraine Economy by 45 Percent This Year
Washington
Indira Chand
+1 (703) 376-7491
ichand@worldbank.org
Brussels
Oliver Joy
32-2-5520059
ojoy@worldbank.org
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