Ukraine economy could shrink by up to 35% in 2022, says IMF
Ukraine’s war-ravaged economy could shrink by up to 35% this year if Russia’s invasion becomes a protracted conflict, the International Monetary Fund has warned.
In an initial assessment, the IMF said the loss of life, damage to critical infrastructure, trade disruption and an outflow of refugees would lead to gross domestic product falling by a minimum of 10% in 2021.
However, it stressed the experience of other countries affected by recent wars – such as Iraq and Syria – suggested the impact could turn out to be much more severe.
The IMF also said the war – which has already led to a sharp rise in energy prices – would cause “devastating” damage to the global economy.
Last week, the IMF announced a $1.4bn package of emergency financial support to help the country cope with the growing financial costs of a war that has resulted in almost half the banks shutting and the central bank struggling to deliver cash to branches and ATMs.
“While geopolitical tensions with Russia had already curtailed Ukraine’s access to markets, the escalation to an invasion of Ukraine by Russia and full-blown war on February 24 has dramatically altered Ukraine’s outlook,” a report prepared by IMF staff said.
“A deep recession and large reconstruction costs are to be expected, on the backdrop of a humanitarian crisis. With the war ongoing, the situation remains extremely fluid, and any forecast is at this stage subject to massive uncertainty.”
The report noted Ukraine faced a “massive” humanitarian shock, with indications of rapidly increasing loss of life and sizeable infrastructure destruction across the country.
Air and seaports had been closed, and substantial damage had been incurred at Mariupol (through which 50% of total exports are shipped) and
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