Ukraine’s economy expected to shrink by 20% this year – Europe

Ukraine’s economy is expected to contract by 20% this year, before recovering in 2023, if a ceasefire is negotiated to end the Russian invasion in the coming months. The conclusion is from a study carried out by the European Bank for Reconstruction and Development (EBRD)which also indicates that Russia is expected to fall by 10%.

The EBRD realizes that most of the conflicts are taking place “in territories that produce 60% of the Ukrainian wealth”, which means that, even if the two parties reach an understanding to end the war, the Ukrainian Gross Domestic Product (GDP) will suffer a strong shock this year, before growing again.

With Russia’s invasion of Ukraine, the EBRD says it generated “the biggest supply shock since at least the early 1970s”, damaging product supply chains, putting pressure on the energy market and threatening energy exports. food due to constraints in the agricultural sectors of both countries.

Forecasts by the bank, whose mission is to support the reconstruction and transition from centralized to market economies in countries in Eastern Europe, also indicate that around 30% of companies in Ukraine have stopped production and electricity consumption has fallen by 40%. compared to pre-invasion levels.

The EBRD underlines that, should the peace negotiations result in a ceasefire agreement in the coming months, the reconstruction of Ukraine could start soon, which would allow the country to recover from the aftermath of the war and put the economy in grow 23% in 2023.

The forecast is, however, subject to great risks, “if hostilities increase or exports of gas or other raw materials from Russia are restricted”, indicates the entity led by Suma Chakrabarti.

The Russian economy is expected to shrink by 10% this year and stagnate in 2023, in the event of a ceasefire. The recession could, however, be deeper if Europe decides to go ahead with the embargo on Russian oil and natural gas imports.

Source: Jornal de Negócios by

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