Ukraine's economy is expected to shrink nearly in half this year as economic activity has become impossible in large swathes of the Eastern European country due to Russia's invasion, the World Bank said Sunday.
"The Russian invasion is delivering a massive blow to Ukraine's economy and it has inflicted enormous damage to infrastructure," Anna Bjerde, World Bank vice president for Europe and Central Asia, said as she called for "massive" financial support for Kyiv so that its government can keep running to support its citizens.
In its economic update for the region, the World Bank said Ukraine's economy is expected to shrink by an estimated 45.1 percent this year, although noting that "the magnitude of the contraction will depend on the duration and intensity of the war."
Bjerde told reporters that the forecast was based on the assumption that the war, which started on Feb. 24, will continue for "a few more months." She attributed the projected steep drop in output, among other factors, to severely affected goods trade amid disruption in maritime, air and rail transport.
Preliminary estimates from early March suggested that the damage to infrastructure, such as rail, roads and ports, would reach $100 billion, but the figure is expected to rise given the continuation of the war.
The conflict has also interrupted the planting and harvest seasons in the country, which is a major exporter of grains.
The 2022 outlook was revised downward by 48.3 percentage points from the January projection, the World Bank said. In 2023, Ukraine's economy is expected to grow 2.1 percent, down 1.4 points from the earlier forecast.
The World Bank warned that repercussions are anticipated to "reverberate beyond the short-term collapse in domestic demand and exports," as output is scarred by the destruction of productive capacity, damage to arable land and a smaller labor supply, with a quarter of Ukraine's population displaced within or outside the country.
The institution also warned that poverty in Ukraine -- based on an international poverty line of $5.50 a day -- is projected to increase to 19.8 percent of the population in 2022, up from 1.8 percent in 2021.
Meanwhile, Russia, which has been hit by massive economic sanctions from the United States, the European Union and other U.S. allies and partners around the world, has already seen its economy plunge into a deep recession with output projected to contract by 11.2 percent in 2022, according to the World Bank.
