Ukraine economy should contract strongly in 2022 due to Russia invasion but could plunge into a devastating recession if the conflict lasts longer, the Monetary Fund said international (IMF) on Monday.
Ukraine government continues to operate, the bank system is stable and debt payments are viable in the short term said the IMF, but warned that the outlook could deteriorate sharply in case the war drags on on.
And that also warned that the conflict could have wider repercussions, including threatening global food security through rising prices and inability plant crops, especially wheat.
At a minimum, the country would see “production fall by 10% this year assuming a quick resolution of war,” the IMF said. in analysis of the economy in the alarm of the Russian invasion.
But the fund warned of “massive uncertainty” around the forecast, and if the conflict continues, the situation will worsen.
The report prepared in advance of IMF approval of $1.4 billion in emergency funding, said Ukraine’s economic output could decline by 25% to 35%, based on on real wartime gross domestic product (GDP) data from Syria, Iraq, Lebanon, and others countries in war.
The country economy increased by 3.2% in 2021 in the middle of a record cereal harvest and high consumer spending.
Corn in the alarm of the Russian invasion on February 24, “the economy in Ukraine dramatically changed”, said Vladyslav Rashkovan, deputy director director for Ukraine on IMF board.
“As of March 6, 202 schools, 34 hospitals, more more than 1,500 residential houses, including multi-apartment buildings, dozens of kilometers of roads and countless objects of critical infrastructure in several Ukrainian cities were totally or partially destroyed by Russian troops, official noted in A declaration.
Ports and airports have also was closed “due to massive destruction”, he said.
Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelenskyy, last week estimated the damage at $100 billion so far.
‘Hunger in Africa’
Despite the considerable damage, the government and the country continued to function.
“Banks are open, they work even on weekends,” Rashkovan said. in March 9 press release.
As of On March 1, the country held foreign exchange reserves of $27.5 billion, “which is enough for Ukraine to honor its commitments,” he said.
The IMF, which last week approved $1.4 billion in emergency aid program for the country, declared in view of great reservations and important financial support”debt durability does not seem to be there risk” in the short term, although there are “very large” uncertainties.
Beyond human and economic losses in Ukraine, IMF met warning against the fallout of war on global economy.
Since the start of the conflict, energy and agricultural prices have soared and the fund has warned they could get worse, fueling rising inflation.
“Disruptions to the spring agricultural season could also limit exports and growth and jeopardize food security,” the report said.
Ukraine and Russia, considered the “breadbasket” of Europe”, are among the largest exporters of wheat in the world. Most Ukrainian wheat is exported in summer and fall.
The initial impact will be on prices, which would be also push prices of other food like corn higheraccording to the IMF.
But one extended the conflict could hit supplies if farmers are unable to sow.
“War in Ukraine means hunger in Africa,” IMF Managing Director Kristalina Georgieva said on Sunday. on CBS.
The United Nations World Food Program in a report on Friday warned that “disruptions to exports in the Black Sea have immediate implications for countries such as Egypt, which are heavily dependent on grain imports from Russia and Ukraine.
And countries which are highly dependent on imported grain will be also feel the pain, including “hunger from points hots like Afghanistan, Ethiopia, Syria and Yemen. »
