In a report released on April 10, The World Bank claimed that Ukraine’s economy will shrink by 45.1% this year due to the ongoing conflict with Russia, which has resulted in the closure of half of the country’s businesses, in addition to damage to a significant amount of vital infrastructure including roads, bridges, ports, and train tracks. As many citizens flee the country, unemployment rates rise while consumption levels decline.
Bloomberg claims that among the economic effects such as rising unemployment rates and the closure of many small to mid-sized businesses that the war has created, inflation rates may exceed 20% in Ukraine. ABC News also shared that Western allies have imposed unprecedented financial and export sanctions in response to the Russian invasion; these sanctions are quickly eliminating more than a tenth of the Russian economy’s growth.
“The magnitude of the humanitarian crisis unleashed by the war is staggering,” said Anna Bjerde, Vice President for Europe and Central Asia at the World Bank. “The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure.” According to NPR, Bjerde underscored the widespread damage the recent war has sparked and foreshadowed the global impacts the conflict will have on major geographic regions.
The report also cited concerns in regards to Ukraine’s ability to act as a major supplier of agricultural exports, particularly wheat, as the country formerly served a major global supplier of these goods. The war has cut off Ukraine access to the Black Sea, which was a key route for exports and accounted for 90% of Ukraine’s grain shipments.
Over four million people have left Ukraine since the Russian invasion began with an additional 6 1/2 million Ukrainian citizens being displaced within the country. Over two million have made their way to Poland, while others settled in Hungary, Moldova and Romania. These numbers are expected to increase as the conflict ensues.
The report also stated that the war and imposed sanctions have disturbed global trade routes and elevated shipping and insurance costs, “which magnifies strains on global value chains,” noting that the most-affected industries include food, automobiles, construction, petrochemicals and transport.