The region’s economy is expected to contract by 4.1% this year, compared to pre-war forecasts of 3% growth, as the economic shocks of the war add to the effects of the Covid pandemic. -19. This would be the second contraction in as many years, and it would be twice as large as the pandemic-induced contraction in 2020, the agency said. world Bank.

Ukraine’s economy is expected to contract by around 45.1% this year, but the extent of the decline will depend on the duration and intensity of the war. Hit by unprecedented sanctions, the Russian economy has already plunged into a deep recession, with production expected to shrink by 11.2% in 2022.

The scale of the humanitarian crisis triggered by the war is staggering

“The scale of the humanitarian crisis triggered by the war is staggering. The Russian invasion is a massive blow to Ukraine’s economy and has inflicted enormous damage to infrastructure,” said Anna Bjerde, World Bank Vice President for Europe and Central Asia.

“Ukraine needs massive financial support immediately as it struggles to keep its economy running and the government works to support the suffering Ukrainian citizens facing an dire situation,” she said. added.

The war came on top of growing worries about a sharp slowdown in the global economy, rising inflation and debt, and a spike in poverty levels. The economic impact has rippled through multiple channels, including commodity and financial markets, trade and migration links, and the negative impact on confidence.

Impact on emerging and developing economies

The war is also hitting emerging and developing economies in Europe and Central Asia hard, a region that was already heading for an economic slowdown this year due to the lingering effects of the pandemic, the World Bank says.

Apart from Russia and Ukraine, Belarus, Kyrgyzstan, Moldova and Tajikistan are set to slip into recession this year, while growth forecasts have been lowered in all economies due to the fallout from war, weaker-than-expected growth in the Eurozone, and commodity, trade and financing shocks.

Russia and Ukraine account for around 40% of wheat imports in the region and around 75% or more in Central Asia and the South Caucasus. Russia is also a major export destination for many countries, while remittances from Russia account for nearly 30% of GDP in some Central Asian economies, including Kyrgyzstan and Tajikistan.

“The war in Ukraine and the pandemic have shown once again that crises can cause widespread economic damage and roll back years of per capita income and development gains,” said Asli Demirgüç-Kunt, Chief Economist of the World Bank for Europe and Central Asia. She called for “governments in the region to strengthen their macroeconomic buffers and the credibility of their policies to contain risks and deal with the potential fragmentation of trade and investment channels.

According to her, they must also strengthen their social safety nets to protect the most vulnerable, including refugees and finally not lose sight of improving energy efficiency to ensure a sustainable future.

Moreover, the invasion has already caused the largest refugee crisis in Europe since World War II and will likely be one of the most lasting legacies of the conflict. As a result, support to host countries and refugee communities is crucial, and the World Bank is preparing operational support programs to neighboring countries to meet increased funding needs related to refugee flows.

Emergency funding of $925 million

The World Bank Group is taking swift action to support the people of Ukraine. Thus, since the beginning of the invasion of Ukraine by Russia on February 24, the Group has mobilized emergency financing of 925 million dollars. This fast-disbursing support will be used to pay salaries for hospital workers, pensions for the elderly and social programs for vulnerable people.

This rapid financing is part of a $3 billion relief package the Bank Group is preparing for Ukraine over the coming months.