WASHINGTON– Devastated by the Russian invasion eight months ago, Ukraine’s economy will plunge 35% this year, the World Bank said on Tuesday.
The war has destroyed factories and farmland and displaced millions of Ukrainians. The World Bank, an anti-poverty agency covering 189 countries, estimates that rebuilding the country will cost at least $349 billion, or 1.5 times the size of Ukraine’s pre-war economy.
“Ukraine continues to need enormous financial support as the war rages unnecessarily and for recovery and reconstruction projects,” said Anna Bjerde, World Bank Vice President for Europe. and Central Asia.
Still, the bank’s assessment for Ukraine’s economy marks an improvement from the 45.1% freefall it forecast in June. And he expects Ukraine’s economy to return to growth in 2023, with growth of 3.3% – although the outlook is highly uncertain and will depend on the course of the war.
Meanwhile, Russia’s economy, hammered by Western sanctions, is expected to contract in both years – by 4.5% in 2022 and 3.6% next year. In June, however, the bank predicted that the Russian economy would fare even worse this year, shrinking by 8.9%. Russia’s energy-producing economy has proven surprisingly resilient, helped by a surge in oil and natural gas prices.
The Washington-based bank expects emerging economies in Europe and Central Asia to collectively contract 0.2% this year and grow just 0.3% in 2023.
The bank’s economic assessment for 23 countries in southern and eastern Europe and central Asia was an improvement from the 2.9% contraction it forecast for 2022 in June. The upgrade reflects, in part, the extension of government stimulus programs originally intended to combat the economic consequences of the coronavirus pandemic.
But the outlook for 2023 has dimmed from the bank’s earlier forecast for regional growth of 1.5%.