World Bank predicts major economic shock in Ukraine and Eastern Europe in 2022
The World Bank issued dire economic forecasts for Ukraine on Sunday evening and warned of an even bleaker scenario if the conflict got bogged down. In 2022, Ukraine’s gross domestic product (GDP) will plunge by 45.1%, that of Russia by 11.2%, according to the latest projections from the Washington institution.
For Ukraine, this is much worse than the 10% to 35% projected a month ago by the International Monetary Fund (IMF), or the 20% announced on March 31 by the European Bank for Reconstruction and Development (EBRD). Government tax revenues have shrunk, businesses have closed or are only partially operational, and trade in goods is severely disrupted. Grain exports have become impossible “in large swaths of the country due to heavy damage to infrastructure”also underlined Anna Bjerde, the vice-president of the World Bank in charge of this region.
Sharp increase in poverty
The increase in poverty is also a source of concern. The proportion of the population living on $5.50 a day is expected to rise from 1.8% in 2021 to 19.8% this year, according to World Bank calculations.
“The results of our analysis are very grimunderlined Anna Bjerde. This is the second major shock to hit the regional economy in two years, and it comes at a very precarious time, as many economies were still struggling to recover from the pandemic.”she also noted.
The whole region suffered the economic consequences of this war. The Bank expects a contraction of 4.1% in GDP this year for all emerging and developing countries in Europe and Central Asia, whereas before the war it expected growth of 3% . This is also much worse than the pandemic-induced recession in 2020 (−1.9%). Eastern Europe alone should see its GDP collapse by 30.7% against growth of 1.4% expected before the invasion.
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