economies of Russia and Ukraine could plunge into the deepest downturn in over 25 years because of the Moscow war on its European neighbor development bank Thursday warned.
February 24 invasion He attacked Ukraine and saw Moscow slapped with sweeping and separating Russia from global financial Textile and push up commodity and energy prices sharply higher.
As the conflict causes “Biggest Show Shock” in 50 years old, the two countries“The economies will contract by 10% and 20%, respectively, this yearThe European Bank, headquartered in London for Reconstruction and Development (EBRD) said.
for both countriesthe contraction will be the most severe since 1994, when the economic turmoil in waking up of the fall of The Soviet Union tore through region.
Region in any military take activities place accounts for 60% of Ukraine’s GDP before COVID-19, according to the chief economist at the European Bank for Reconstruction and Development, Beata Gavorcik.
Ukraine, which was a poor country begin with Javorcik told Reuters. “We understand that between one ter and half of Businesses have stopped working and electricity consumption is 60%. of at the pre-war level.
Before Russia invaded its pro-Western neighbor, the European Bank for Reconstruction and Development was already in operation in The growth of 3.5% for Ukraine and 3% for Russia.
The development bankby issuing emergency forecasts, he said that first international financial Foundation for update Since the outbreak of the outbreak of the war in Ukraine last Month.
The latest speculations ‘presumes that a halt-fire It is mediated between a couple of months, followed by soon after by start of Great effort for reconstruction in “Ukraine,” he said.
Under this scenario, Ukraine’s Gross Domestic Product (GDP) should 23% recovery next year.
But severe economic sanctions imposed on Russia by the West means it will score zero growth.
“Penalties on Russia is expected to do so remain for What is expected futureDin Russian economy to slack in 2023, with Negative repercussions for number of Neighboring countries in Eastern Europe, the Caucasus and Central Asia, the European Bank for Reconstruction and Development said.
“With so much uncertainty, the bank Intend to make other predictions in The next Husband of months, taking into account other developments.”
Russia already lost 2% of Gross domestic product
The report estimates that Russia lost about $30 billion of Export revenue due to recent oil and gas sanctions, equivalent to about 2% of its gross domestic product.
Even if the penalties removedRussia reputation As an investment destination it will be hurt,” Javorcik said. “The talks of nationalization of assets of Multinational companies will be remembered for interval.”
Belarus – which borders both Ukraine and Russia, and also Facing Western sanctions over it’s a role in Conflict – This was expected to shrink by 3% year Then slack in 2023.
was established in 1991 to help former soviet bloc countries switch to free-market Since then, the European Bank for Reconstruction and Development extended Its reach, including countries in Middle East and North Africa.
The bank Expect its investment area, excluding Belarus and Russia, to grow by 1.7% this yearless than half of Previous growth Climate forecast of 4.2% in November.
Growth is then expected pick up to 5% in 2023.
extreme uncertainty
Expectations are subject to an exceptionally high degree of Uncertainty, including major downside risks should escalation of hostilities or should exports of Gas or other goods from Russia have been restricted.”
The world economy faced “The biggest shocker in the show since at least the early 1970s,” she added. out Russia and Ukraine “provide disproportionately large amounts.” share of Commodities, including wheat, corn, fertilizer, titanium and nickel.”
Javorcik said that inflationary pressures, which were already high before invasion“It will certainly increase now, which will have an unequal effect on Many people on low incomes countries where is the bank invests, “well on poor segments of The population in bone countries. “
The bank Earlier this month it revealed a €2 billion ($2.2 billion) “flexibility” package to help Citizens, businesses and countries affected by war in Ukraine, including those hosting refugees.
“Europe has also Witnessed the largest forced displacement of people Since World War II, the report examines the possible consequences of This migration.
“Skilled workers from Ukraine may provide a boost to some economies in The tallest termEspecially in countries with Population aging.
But “in short-termeconomies facing financial and administrative pressures challenges As it expands up Territory of Housing, health care and education.
The repercussions can be felt widely
The repercussions of the conflict will be widely felt, Javorcik said, saying there is a “great amount risk”Some emerging market economies will gradual up Export restrictions to shield Domestic consumers from further price Increases. central banks rate The heights will accelerate in This scenario.
It was Turkey one of The countries facing ‘Strong headwind’ due to mixing of rising Import costs of energy and grain while shortage of Revenues of Russian and Ukrainian tourists added to pressure.
growth for Turkey, the largest recipient country of EBRD funds have been reduced by 150 basis points to 2% this year and 3.5% in 2023.
The Governors of the European Bank for Reconstruction and Development – representatives of its members countries – Will decide in a few days on Proposal to suspend Russia and Belarus indefinitely from access In its financing, Javorcik added.
The European Bank for Reconstruction and Development, which condemned Russia invasion of Ukraine announced on Tuesday that it will close its offices in Moscow and Minsk in “The inevitable result of Actions taken by the Russian Federation with The help of Belarus. “
The European Bank for Reconstruction and Development has not set new money to work in Russia since Moscow annexed the Crimea in 2014 endowment was made on new investment in Belarus after the disputed 2020 elections.
The lender usually provides its economic updates in May and November.
