19 Apr 2022 21:47

IMF forecasts decline in Ukraine's GDP by 35%

KYIV. April 19 (Interfax-Ukraine) - The Ukrainian economy is expected to decline by 35% in 2022, although it is impossible to obtain precise measurements of its damage, according to the updated World Economic Outlook of the International Monetary Fund (IMF) published on Tuesday.

"For Ukraine, all projections for 2022-27 except Real GDP are omitted due to an unusually high degree of uncertainty. Real GDP is projected through 2022," the document said.

The 35-percent drop is generally in line with the data containing in the study The Macroeconomic Costs of Conflict on the most serious conflicts published by Natalija Novta and Evgenia Pugacheva in 2021, the IMF said.

According to the study, ten years after the beginning of a conflict, the GDP per capita still remains about 28% lower mostly due to the drop in private consumption of about 25%.

In addition, a conflict is also linked with a sharp decline in official trade, according to estimates, export drops by 58% and import by 34% ten years after the beginning of the conflict.

The beginning of a conflict also often causes a considerable outflow of refugees to the neighboring underdeveloped countries in the shorter term and quite a small, but very steady outflow of refugees to the developed countries in the longer term, according to the authors of the study.

In general, the IMF lowered its forecast of the global GDP growth for 2022 from 4.2% to 3.6% and for 2023 from 3.8% to 3.6% and increased inflation forecasts, from 3.9% to 5.7% in developed countries this year and from 5.9% to 8.7% in developing ones.

As reported, before the events in Ukraine, the World Bank expected the Ukrainian economy to grow by 3.2% this year. According to the bank's updated estimates, it will decline by 45.1%. According to the World Bank's report of early April, the Ukrainian economy is expected to regain only 2.1%, which is also worse than the previous expectations of 3.5%.

The National Bank of Ukraine forecasts the decline of the country's GDP by at least a third this year, refraining from more detailed estimates.