If the war with Russia continues, the economy of Ukraine could contract by more than a third this year, says IMF.
According to the global lending body, the country is already seeing a 10% decline as a result of the invasion. This has wreaked havoc on major cities, wrecked airports, and sparked a refugee crisis.
The IMF just sent Ukraine $1.4 billion in emergency funds. It is the maximum amount allowed under its terms. It predicted that billions more will be required.
A report produced before the emergency loan was granted last week featured a grim economic forecast for Ukraine. The figures were derived by examining the economics of countries like Lebanon, Iraq, and Syria during times of war.
“With the conflict still going on, the situation remains extremely fluid, and any forecast at this point is susceptible to huge uncertainty,” the report added, projecting a 25% to 35% contraction in the GDP.
It stated that the report’s estimations should be “viewed as a bare minimum.”
Following Russia’s invasion of Crimea in 2014 and 2015, Ukraine experienced economic shocks. With output decreasing by 6.6 percent and ten percent, respectively.
However, thanks to a record grain crop, Ukraine’s economy, which is mainly reliant on exports, grew by 3% last year. In 2022, output predicted to increase by another 3.6 percent.
“A deep recession and high reconstruction expenses are to be expected, on the backdrop of a humanitarian crisis,” the IMF said.
More Struggle To Face
According to the 7 March report, the government has prioritized defense and social spending while remaining current on its foreign debt payments. Companies continue to pay taxes, and money continues to flow through the country’s financial system. Even though many bank branches have closed and authorities have been forced to take emergency measures.
According to the assessment, the country is going to struggle much more.
According to IMF officials, the IMF wants to set up tools to help its members send money to Ukraine, which has already spent the equivalent of $1.4 billion servicing, And repaying the government’s foreign debt since the beginning of the war.
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