World Bank reveals damage to Russian GDP from sanctions and says Ukraine economy to be slashed by half

Russia’s economy has already plunged into ‘deep recession’, World Bank says

Ukraine's economic output is likely to contract by a drastic 45.1 per cent due to Russia's unprovoked invasion, which has rendered economic activity impossible in the European nation, the World Bank said.

The Washington-based lender in its "War in the Region" economic update on Sunday said Russia's GDP output for 2022 will fall 11.2 per cent owing to the plethora of sanctions imposed by the United States and its allies.

As per the report, the unprecedented sanctions have pushed Russia's economy towards a "deep recession".

The Eastern Europe region, comprising Ukraine, Belarus and Moldova, is forecast to show a GDP contraction of 30.7 per cent this year due to war-induced disruption of trade after two years of the Covid-19 pandemic.

It is estimated that more than half of Ukraine's businesses are closed, while the closure of the Black Sea shipping has cut off nearly 90 per cent of the country's grain exports.

The magnitude of Ukraine's contraction is "subject to a high degree of uncertainty" over the war's "duration and intensity", the report stated.

"The magnitude of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure,” said Anna Bjerde, World Bank vice president for Europe and Central Asia.

The economic impact of the war is being felt through the slowdown in financial markets, trade and migration links, it said.

Vladimir Putin's war in Ukraine has forced nearly a quarter of 44 million people from their homes and turned cities into rubbles.

"Ukraine needs massive financial support immediately as it struggles to keep its economy going and the government running to support Ukrainian citizens who are suffering and coping with an extreme situation," Ms Bjerde added.

In an earlier report, the lender warned the war would hinder the economic growth of Asia and the Pacific region as well. It expected growth in the developing East Asia and Pacific (EAP) region, which includes China, a Russian ally, for 2022 to expand by five per cent, lower than its 5.4 per cent estimate in October.

The World Bank has marshalled nearly $923m (£709 m) in loans and grants for the war-torn country and is likely to support a package of more than $2 bn (1.5bn).

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