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Ukraine's war-torn economy will sink 35% in 2022: World Bank

Russian economy, hammered by Western sanctions, is expected to shrink both years — by 4.5% in 2022 and 3.6% next year

October 04, 2022 08:24 pm | Updated 08:24 pm IST - Washington

Ukrainian servicemen drive atop a tank in the recently retaken area of Izium, Ukraine. The war has destroyed factories and farmland and displaced millions of Ukrainians. File

Ukrainian servicemen drive atop a tank in the recently retaken area of Izium, Ukraine. The war has destroyed factories and farmland and displaced millions of Ukrainians. File | Photo Credit: AP

Devastated by Russia's invasion eight months ago, the Ukrainian economy will plunge 35% this year, the World Bank forecast on October 4.

The war has destroyed factories and farmland and displaced millions of Ukrainians.

The World Bank, a 189-country anti-poverty agency, estimates that rebuilding the country will cost at least $349 billion, 1.5 times the size of Ukraine's prewar economy.

“Ukraine continues to need enormous financial support as the war needlessly rages on as well as for recovery and reconstruction projects,'' said Anna Bjerde, World Bank vice president for Europe and Central Asia.

Also Read | U.K. to support Ukraine until war is won

Still, the bank's assessment for Ukraine's economy marks an upgrade from the 45.1% freefall it forecast in June. And it expects that the Ukrainian economy will return to growth in 2023, expanding 3.3% — though the outlook is highly uncertain and will depend on the course of the war.

Meanwhile, the Russian economy, hammered by Western sanctions, is expected to shrink both years — by 4.5% in 2022 and 3.6% next year. In June, however, the bank had predicted the Russian economy would fare even worse this year, shrinking by 8.9%.

The energy-producing Russian economy has proven surprisingly resilient, helped by a surge in oil and natural gas prices.

The Washington-based bank expects the emerging economies of Europe and Central Asia collectively to shrink 0.2% this year and eke out growth of just 0.3% in 2023.

The bank's economic assessment for 23 countries in southern and eastern Europe and in Central Asia was an improvement from the 2.9% contraction it predicted for 2022 back in June. The upgrade reflects, in part, the extension of government stimulus programs originally meant to combat the economic consequences of the coronavirus pandemic.

But the outlook for 2023 dimmed from the bank's earlier forecast for 1.5% regional growth.

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