Ukraine economy to shrink by almost half this year, World Bank forecasts

theguardian.com:

Ukraine’s economy is on course to contract by almost half this year as the Russian invasion and the impact of a “deep humanitarian crisis” takes its toll, the World Bank has said.

With a blockade of Black Sea ports in the south of Ukraine and the havoc caused to industry in the east, the war-torn country’s GDP is projected to shrink by about 45% in 2022.

The Washington-based development organisation said Russia would also fall into recession and many countries surrounding Ukraine would suffer severe hardship, with some pushed to seek outside help from international agencies to prevent them defaulting on existing debts.

“The war is having a devastating impact on human life and causing economic destruction in both countries, and will lead to significant economic losses in the Europe and central Asia region and the rest of the world,” the World Bank said in its forecast published on Sunday.

The Bank and the International Monetary Fund (IMF) will host finance ministers and central bank bosses at their annual spring meetings this week.

David Malpass, the president of the World Bank, and the head of the IMF, Kristalina Georgieva, are expected to say they plan to offer extra financial support to countries affected by the invasion, many of which are suffering spiralling food costs.

Last month, Georgieva said it was unlikely the war would trigger a global financial crisis, but warned of a severe recession in many countries close to the conflict.

The Bank said the second major shock in two years, after the pandemic, would lead to a 4.1% decline in economic output across the region – twice as steep as the recession in 2020 from the Covid-19 crisis.

The World Bank’s Europe and central Asia regional data stretches from Ireland in the west to