Russia’s war to shrink Ukraine economy 45%, World Bank says

LONDON — The World Bank says Ukraine‘s economy will shrink by 45.1% this year because of Russia’s invasion, which has shut down half of the country’s businesses, choked off imports and exports, and damaged a vast amount of critical infrastructure.

Unprecedented sanctions imposed by Western allies in response to the war, meanwhile, are plunging Russia into a deep recession, lopping off more than a tenth of its economic growth, the World Bank said in a report Sunday.

The war is set to inflict twice the amount of economic damage across Europe and Central Asia that the COVID-19 pandemic did, the Washington-based lender said in its “War in the Region” economic report.

” The humanitarian crisis caused by the war is immense,” said Anna Bjerde (Vice President for Europe and Central Asia at the World Bank). “The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure.”

The report said economic activity is impossible in “large swathes of areas” in Ukraine because productive infrastructure like roads, bridges, ports and train tracks have been destroyed.

Ukraine is a major supplier of wheat and other agricultural exports. However, this role is now in doubt due to the war. The war has cut off access to the Black Sea, a key route for exports, including 90% of Ukraine’s grain shipments, it said.

The World Bank said the humanitarian catastrophe will be the biggest shockwave from the war and likely its most enduring legacy, as the wave of refugees fleeing Ukraine is “anticipated to dwarf previous crises. “

More than 4 million people fled Ukraine, with many of them going to Poland, while others are heading to Hungary, Romania, and Moldova. Additional 6.5 million people have been internally displaced. According to the World Bank, these numbers will continue to rise as the war drags out.