The World Bank expects the Ukrainian economy to contract by eight times its Russian counterpart World Bank

The Ukrainian economy will shrink eight times its Russian counterpart this year as a result of the war sparked by the invasion of Moscow in February, world bank Saucepan.

In her latest report on Europe and Central Asia, the Washington-based institution said the Ukrainian economy will shrink 35% in 2022, compared to a 4.5% decline in Russia’s gross domestic product.

previous estimates He had hinted that the Kremlin had faced an even bigger economic hit this year, but the World Bank said the impact of the sanctions had so far been less severe than expected.

It was Kyiv made military progress In recent weeks, and since April, the Ukrainian economy has shown signs of growth. However, the bank said the recovery would be slow and the cost of repairing the damage caused by the war would be enormous. The cost was estimated at a minimum of $349 billion (£303 billion) – more than one and a half times the country’s pre-war GDP.

Ukraine was already the poorest country in Europe even before the war began in February of this year, but more than seven months of conflict means a third of its 44 million people have been displaced and 60% live below the national poverty line.

“The Russian invasion of Ukraine triggered one of the largest human displacement crises and took a heavy toll in human and economic lives,” said Anna Berdy, World Bank Vice President for Europe and Central Asia.

“Ukraine still needs massive financial support as the war unnecessarily rages on, as well as for recovery and reconstruction projects that can be started quickly.”

Inflation accelerated quickly, reaching an annual rate of just under 24% in April, with food price inflation hitting families, particularly the poor.

The fallout from the war was expected to continue, with the economy damaged by the destruction of productive capacity, damage to arable land, and a reduced supply of labour. The prospect of refugees not returning is becoming more and more likely, with war now entering its eighth month and people fleeing conflict increasingly settling in host countries.

By contrast, the World Bank said the skyrocketing energy prices helped soften the blow to Russia from sanctions.

“The sanctions imposed on Russia in the aftermath of its war in Ukraine have significant negative economic impacts, albeit less severe in the short term than initially anticipated,” she added.

“The initial shock was mitigated by the authorities’ robust fiscal response, capital controls, monetary tightening and swift actions to stem financial sector risks, as well as higher foreign currency inflows led by the rise in global commodity prices.”

The World Bank said the freezing of half of Russia’s international reserves and weak domestic oil and gas revenues helped make the country more vulnerable to lower global energy prices.

“Moreover, the sanctions have significantly reduced total imports, restricted access to new technologies and equipment, and external financing, thereby weakening growth prospects in the medium to long term,” the report added.