IMF: Ukraine economy could shrink as much as 35%
-
Loading... - Venita Mitchell
- 15 Mar 2022
- 404 Views
- 0 Like
- 0 Comment
The global lending body said the country is already facing a downturn of 10% due to the invasion, which has hit major cities, destroyed airports and precipitated a refugee crisis.
The IMF recently sent $1.4bn in emergency funds to Ukraine - the maximum allowed under its rules.
Billions more will be needed, it said.
The dire economic outlook for Ukraine was included in a report prepared before the emergency loan was approved last week. The estimates were calculated by looking at wartime economies in countries such as Lebanon, Iraq and Syria.
"With the war ongoing, the situation remains extremely fluid, and any forecast is at this stage subject to massive uncertainty," the report said, predicting the economy could contract by between 25% to 35%.
It said the estimates in the report should be "seen as a bare minimum".
In 2014 and 2015, Ukraine also suffered economic shock, with output falling 6.6% and 10% respectively, following Russia's annexation of Crimea.
But Ukraine's economy, which is heavily dependent on exports, expanded 3% last year, lifted by a record grain harvest. Output had been expected to grow another 3.6% in 2022.
Now, the IMF said: "A deep recession and large reconstruction costs are to be expected, on the backdrop of a humanitarian crisis."
For now, the government has prioritised defence and social spending and remained current on its foreign debt obligations, according to the 7 March report. Companies are still paying taxes and money is still flowing through its financial system, though many bank branches have shut and authorities have had to take emergency measures. Read More…
