London, 31 March 2022 (TDI): According to the European Bank for Reconstruction and Development (EBRD) Russia’s economy is set to shrink by 10% while Ukraine’s economy will shrink by 20%.
The conflict has triggered the worst supply chain shock in over 50 years according to the Bank. The supply chain shocks will affect many countries around the world.
The Bank issued a report based on assumptions of what will happen in the coming months. The latest prognoses assume that a ceasefire happen after a few months which will then be followed by a major reconstruction project by Ukraine.
According to these assumptions, Ukraine’s economy should rebound by 23% in 2023. Before the conflict started the Bank had forecasted a growth rate of 3.5% for Ukraine and 3% for Russia.
Ukraine war and sanctions to shrink Russian economy by 10% https://t.co/binQxbFcb2 #EBRDrep
— Beata Javorcik (@BJavorcik) March 31, 2022
On the other hand, sanctions on Russia are predicted to remain for the foreseeable future. Heavy sanctions by the Western nations mean that the invading country could register 0% growth in the following year.
The Russian economy is expected to stagnate in 2023, the negative spillover from this will affect a number of countries, but mainly states in eastern Europe, Central Asia, and the Caucasus.
Amidst uncertainties, the Bank is expected to make another forecast in the coming months as the situation develops.
Belarus, one of Russia’s most important allies has aided the country in its invasion of Ukraine. The EBRD predicts Belarus’ economy will shrink by 3% in 2022 and then stagnate in 2023.
European Bank for Reconstruction and Development (EBRD)
The European Bank for Reconstruction and Development was established in 1991 to foster the transition toward open-market-oriented economies and to promote private and entrepreneurial initiatives.
The Bank works in many emerging economies across Europe, Central Asia, and the southern and eastern Mediterranean. The bank invests mainly in private banks and businesses, including new ventures and existing companies.
