Development Bank Expects 30 Percent Contraction of Ukrainian Economy
Ukraine’s economy may shrink by 30 percent this year. With this new estimate comes the European Bank for Reconstruction and Development (EBRD), which assumes that the war with Russia will end this year.
In March, the London bank still expected a 20 percent contraction in Ukraine’s gross domestic product (GDP).
Once established to help former Soviet states transition to a free-market economy, the bank has turned gloomier as the war continues. The organization previously assumed that Ukraine and Russia would reach a ceasefire within a few months.
“In addition to direct war damage, agricultural production is hampered by a lack of fuels, seeds, fertilizers and agricultural equipment,” the EBRD writes in a report. According to researchers from the Development Bank, farmers in Ukraine cannot work on at least a fifth of agricultural land due to the war. Nevertheless, the Eastern European country is a major exporter of food crops worldwide. Ukraine accounts for 10 percent of global wheat exports, 14 percent of all corn exported and 37 percent of all sunflower oil.
Russia is also experiencing a strong economic contraction this year due to the invasion of Ukraine. The EBRD expects a 10 percent contraction by 2022. Out of anger at the attack on Ukraine, Western countries have imposed sanctions against the country, including the freeze on the foreign assets of the Russian central bank.
The United States also does not buy fossil fuels from the country, and the United Kingdom expects to stop imports of Russian oil this year completely. Within the European Union, negotiations are still underway between member states about a boycott of Russian oil.