• 393 days Will The ECB Continue To Hike Rates?
  • 393 days Forbes: Aramco Remains Largest Company In The Middle East
  • 395 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 795 days Could Crypto Overtake Traditional Investment?
  • 800 days Americans Still Quitting Jobs At Record Pace
  • 802 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 805 days Is The Dollar Too Strong?
  • 805 days Big Tech Disappoints Investors on Earnings Calls
  • 806 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 808 days China Is Quietly Trying To Distance Itself From Russia
  • 808 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 812 days Crypto Investors Won Big In 2021
  • 812 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 813 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 815 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 816 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 819 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 820 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 820 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 822 days Are NFTs About To Take Over Gaming?
American Wealth Is Built On Borrowing

American Wealth Is Built On Borrowing

Wealthy Americans are now funding…

U.S. Wage Growth Under Threat As Inflation Hits 40-Year High

U.S. Wage Growth Under Threat As Inflation Hits 40-Year High

The U.S economy continues producing…

  1. Home
  2. Markets
  3. Economy

Europe’s Economy Is On The Brink As Putin’s War Escalates

Europe’s Economy Is On The Brink As Putin’s War Escalates

Aside from the tragic human casualties and infrastructure devastation, Ukraine is facing a massive economic crisis that the World Bank estimates will shrink the country’s economy by 45.1% this year

With Putin’s war already succeeding in shutting down half of Ukraine’s businesses, the World Bank’s new estimate is a serious blow when compared with the pre-war forecast of 3% growth.

In a recent report, Anna Bjerde, World Bank Vice President for the Europe and Central Asia region, said the magnitude of the contraction will depend on the duration and intensity of the war. 

"The magnitude of the humanitarian crisis unleashed by the war is staggering. The Russian invasion is delivering a massive blow to Ukraine's economy, and it has inflicted enormous damage to infrastructure," she said.

A continuation of the war would cause even larger falls in GDP, with the bank predicting a downside 20% contraction in Russia’s GDP and a 75% contraction in Ukraine’s GDP.

Since the start of the invasion, roughly 3 million people have lost their jobs while the Ukraine government’s preliminary estimates suggest that the economy may have already lost approximately $565 billion.

With millions of Ukrainians fleeing the country or joining the fight against Russia, the workforce has shrunk dramatically, making it difficult to keep the wartime economy going.

More than 4 million people have fled Ukraine, mostly to Poland, with an additional 6.5 million displaced within the country 

The blockage of Black Sea shipping from Ukraine has cut off some 90% of the country's grain exports and half of its total exports. Global food prices have risen as a result, with Ukraine being the world's biggest exporter of sunflower oil, followed by Russia. All in all, Ukraine’s ports have already suffered a fall in traffic of more than 75%

The World Bank says Ukraine needs "massive financial support immediately". The Bank has already sent some $1 billion to help the government provide critical services to citizens, and has promised a further $2 billion in the coming months.

At the same time, the World Bank says Russia has already plunged into a deep recession due to Western sanctions, projecting Russia's economy would contract by 11.2% this year.

The US has banned all Russian oil and gas imports and the EU has proposed a plan to make Europe independent from Russian fossil fuels before 2030. However, the block still pays Russia nearly $884 million for energy daily. That alone amounts to nearly 40% of Russia's income.

Experts agree that Russia’s invasion of Ukraine will have lasting and negative effects on the world economy and the rises in global energy and food prices and inflation will hit millions of people.

The war is set to inflict twice the amount of economic damage across Europe and Central Asia than the pandemic did in 2020.

In addition to Russia and Ukraine, neighboring Belarus, the Kyrgyz Republic, Moldova and Tajikistan are projected to fall into recession this year. The growth projections have been downgraded in all economies due to spillovers from the war.

Back to homepage

Leave a comment

Leave a comment