Ukraine economy will contract by 35% this year – World Bank

International financial institution, World Bank said on Tuesday that the economy of Ukraine will fall by at least 35% in the current year. Economy of Ukraine is currently in very bad shape because of the Russian special military cooperation in eastern Ukraine which began earlier this year.

The Russian invasion of Ukraine resulted in massive destruction of infrastructure and facilities in the Eurasian country which was earlier used for economic developments and activities. The World Bank stated that rebuilding of Ukraine will cost at least 349 billion dollars which is more than 1.5 times of the size of Ukrainian economy before the war. Various factories, farmlands and such similar economic infrastructure were destroyed during the war which cut down the economic output from the country.

The latest assessment and forecast publishes by World Bank is better than the earlier assessments which had forecasted a free-fall of Ukrainian economy by 45.1 percentage in the current. That forecast was made by World Bank in June 2022.

Before the beginning of war, in 2021, the gross domestic product of Ukraine was 198.32 billion in nominal terms with the majority of economic activity coming from the services sector. Attacks on electricity grids in the country caused massive power outages in the country which in turn resulted in huge losses in both industry and services sector. Offences and counter offences which are focused on port cities and major agricultural lands also had negative impact on the agriculture part of the economy.

Anna Bjerde who is vice president for Europe and Central Asia at World Bank said that Ukraine need enormous financial support for reconstruction and such similar purposes as the Russian special military operation in the country is raging on without any signs of stoppage.

The new forecast by World Bank also states that national economy of Ukraine will bounce back in 2023 by posting a growth of 3.3%. These numbers totally depend upon the future course of Russia Ukraine war which can take many turns.

The high inflation rates in the countries from Europe and Central Asia will have severe impact on the growth prospects of these countries in the current financial year. Heightening inflation rates have forced central bank to hike interest rates which pushes economies into recession.