According to the latest projections from this Washington-based organization, Ukraine’s gross domestic product will plunge 45.1% this year, while Russia’s will drop 11.2%.
For Ukraine, this is a much worse fall 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).
The entire region is suffering the economic consequences of this war which began on February 24, which caused the flight of more than four million Ukrainians to Poland, Romania and Moldova and which caused the prices of cereals and ‘energy.
The World 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 much worse than the pandemic-induced recession in 2020 (–1.9%).
Eastern Europe alone should see itsGDP collapse of 30.7% against an expected growth of 1.4% before the invasion.
The results of our analysis are very grimsaid Anna Bjerde, the vice-president of the World Bank in charge of this region, during a conference call.
” 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. »
As for Eastern Europe, it is also subject to the sanctions that have been imposed on Belarus because of its role in the war.
The authors of the report note that Moldova is thus likely to be one of the countries hardest hit by the conflict, not only because of its geographical proximity to the war but also because of its inherent vulnerabilities as a small economy closely linked to the two countries, Ukraine and Russia.
In addition, this part of Europe is dependent on natural gas to meet its energy needs.
The bleakest outlook, however, is for Ukraine, as government tax revenues have shrunk, businesses have closed or are only partially operational and trade in goods is severely disrupted.
Anna Bjerde notes for example that grain exports have become impossible
across large swaths of the country due to heavy damage to infrastructure.
The development organization is also worried about increasing poverty. The proportion of the population living on US$5.50 a day is expected to increase from 1.8% in 2021 to 19.8% this year, according to World Bank calculations.
In developing all of its forecasts, the Bank has assumed that the war will continue
some months. But she acknowledges that these forecasts are subject
to great uncertaintythe real impact of the war in the euro zone being unknown.
The organization has therefore also considered a more pessimistic scenario which takes into account a stronger impact on the euro zone, an escalation of sanctions and a shock to financial confidence.
theGDP of the region would then contract by almost 9%, much more than the 5% suffered during the global financial crisis of 2009 and more than the 2% recession induced by the pandemic in 2020, recalls the World Bank.
In this scenario, the plunge would be 20% for Russia and 75% for Ukraine.