World Bank expects 45.1% fall in Ukraine's GDP, 11-fold increase in poverty in 2022

KYIV. April 11 (Interfax-Ukraine) - Ukraine's GDP will drop by 45.1% in 2022, the World Bank forecasts, noting that prior to Russia's invasion, it expected the Ukrainian economy to grow by 3.2% this year.

According to its report on the economic outlook for Europe and Central Asia in light of events in Ukraine, the Ukrainian economy is expected to recover by only 2.1% in 2023, which is also worse than previous expectations of 3.5%.

Events in Ukraine "have triggered a catastrophic humanitarian toll and severe economic contraction." "The impact on poverty is also likely to be devastating, although it is hard to quantify at this stage. Based on the international poverty line of $5.50 per day, poverty is projected to increase to 19.8% in 2022, up from 1.8% in 2021, with an additional 59% of people being vulnerable to falling into poverty," the World Bank said in the report.

According to the document, modeling using the most recent macroeconomic projections indicates that the proportion of people with incomes below the actual subsistence minimum (the national poverty line) could reach 70% in 2022, up from 18% in 2021. In the absence of a massive postwar support package, that figure will still be above 60% by 2025, the bank added.

According to its forecasts, private consumption in Ukraine will fall by 50% this year, while public consumption will decrease by 10% and capital investment will shrink by 57.5%. Exports of goods and services will fall by 80% and imports by 70%, while the national debt to GDP will rise from 50.7% to 90.7%. The forecast for the consumer price index is 15% with an increase up to 19% next year.

The World Bank experts expect the deficit of the current account of the balance of payments to be 6.8% of GDP this year and to expand to 16.8% in 2023, and the fiscal deficit (non-military) at 17.5% and 26.5% respectively.

Even for 2024, the World Bank predicts an acceleration of economic growth to just 5.8%, with an inflation rate of 8.4%.

"Thanks to extensive recovery efforts, growth is expected to exceed 7% by 2025 on the back of a slow recovery in the production and export capacity and the gradual return of refugees. Nevertheless, by 2025, the GDP will be a third less than its 2021 level," the document said.