GDP of Ukraine in 2022 will fall by 45.1%, the World Bank predicts. Before the start of Russia's military special operation, he expected the Ukrainian economy to grow by 3.2% this year, and by 3.5% in 2023.
The economic recession in Ukraine will increase to 19.8% in 2022 compared to 1.8% in 2021, while another 59% of people may fall below the poverty line, the WB noted.
“Based on the international poverty line of $5.5 a day, the poverty rate is projected to rise to 19.8% in 2022, up from 1.8% in 2021, with an additional 59% of people fall below the poverty line,” the bank predicts.
According to the report, modeling using the most recent macroeconomic projections suggests that the share of the population with incomes below the actual subsistence level (national poverty line) could reach 70% in 2022, up from 18% in 2021. In the absence of a massive post-war support package, this figure will still be above 60% by 2025, according to the WB.
According to his forecasts, private consumption in Ukraine this year will fall by 50%, while public consumption will fall by 10%, and capital investment will sag by 57.5%. Exports of goods and services will decrease by 80%, imports - by 70%, while public debt in relation to GDP will increase from 50.7% to 90.7%. The forecast for the consumer price index is 15% with an increase to 19% next year.
The World Bank explains the absence of a strong rebound in the growth of the Ukrainian economy in 2022-2023 by the fact that as a result of hostilities a critical amount of industrial infrastructure, including railways, bridges, ports and roads, was destroyed, which made economic activity impossible in large areas of the territory . Merchandise trade has all but come to a halt as damaged transit routes prevent goods from being transported overland, and the loss of access to the Black Sea cuts off half of Ukraine's exports and 90% of grain trade, and the planting and harvesting season has been disrupted.
The loss in education due to the pandemic is expected to be increased due to the Russian military operation, given the destruction of schools and disruptions in schooling. The Bank, referring to UNICEF data, notes that out of 7.5 million children, 4.5 million were displaced.
“With the destruction and degradation of physical capital and vital assets, combined with the devastation of war and the pandemic, recovery will be more difficult without significant recovery efforts and capital flows,” concludes the World Bank.
