Ukraine’s economy will shrink 45.1% this year following the Russian invasion, while repercussions for the wider region will also be severe, hampering growth and sending countries into recession, according to new estimates from the World Bank.
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“Economic activity has become impossible in large swaths of the country,” Anna Bjerde, the World Bank’s vice president for Europe and Central Asia, told reporters in reference to Ukraine. Russia will see a contraction of 11.2%.
Ukraine aid: The bank has disbursed more than $500 million to Ukraine since the invasion began, and the figure is set to hit more than $900 million soon. Ultimately, donors are aiming for $3 billion in aid.
“Our support will be helpful but is a fraction of what is needed,” Bjerde said. Donors will meet to discuss additional aid for Ukraine during the Spring Meetings of the World Bank and International Monetary Fund in Washington this month. European countries hosting more than 4 million refugees will also need assistance.
Contagion: Emerging market and developing countries in Europe and Central Asia as a group will see a 4.1% economic contraction, the bank warned, in part due to rising costs of food and fuel, as well as drops in tourism.
Tajikistan and Kyrgyzstan are particularly vulnerable. The two nations are at risk of a recession and increased poverty because of their deep integration with Russia’s economy, including a reliance on remittances for nearly a third of their gross domestic product. The bank said it is increasing social support programs to the most vulnerable countries.
“The Russian invasion has reversed the region’s recovery from the [COVID-19] pandemic,” said Bjerde.
How long: Even if the war ends soon, Ukraine will need substantial financial support to rebuild. A sustained conflict would not only have massive costs for human life but would cause further damage across the region. Already, food price hikes are being felt globally, as Ukraine and Russia are producers of grains, cereals, and oil.
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.
