World Bank Now Projects Return To Weak Growth In 2023 In Europe, Central Asia
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The World Bank says countries in its Europe and Central Asia region will return to weak growth in 2023 “reflecting negative spillovers” from the war in Ukraine.
The World Bank said the collective GDP in its Europe and Central Asia region was now expected to grow by 0.3 percent in 2023.
That will follow contraction now forecast to be 0.2 percent this year, the World Bank said in an economic update for Europe and Central Asia released on October 4.
The bank noted that the 0.2 percent contraction forecast for 2022 was a marked improvement over the bank’s forecast in June of a contraction of 2.9 percent.
The new forecasts for the 23-countriy region, including Ukraine and Russia, reflect better-than-expected resilience in some of the region’s largest economies along with extensions of pandemic-era stimulus programs in some countries.
The report said the bank now expects the economy of Ukraine to shrink 35 percent this year, an improvement over the 45 percent contraction forecast earlier this year.
Ukraine’s economy has been “scarred by the destruction of productive capacity, damage to agricultural land, and reduced labor supply,” the report said. It also estimates more than 14 million people have been displaced by the war.
Recovery and reconstruction will require at least $349 billion, or more than 1 1/2 times the size of Ukraine’s prewar economy, the report said.
The World Bank also said the ongoing war dampens prospects of a post-pandemic recovery for emerging and developing economies in the region.
“The overlapping crises of the war in Ukraine, the ongoing pandemic and the surge in food and fuel prices are painful reminders that governments need to be prepared to manage massive, unexpected shocks that unravel very quickly,” Anna Bjerde, the World Bank’s vice president for Europe and Central Asia, said in a statement.
“Ukraine continues to need enormous financial support as the war needlessly rages on as well as for recovery and reconstruction projects that could be quickly initiated,” Bjerde added.
The World Bank said Russia’s economy was now forecast to contract by 4.5 percent in 2022, compared with an 8.9 percent contraction estimated in June. Russia’s economy is forecast to shrink by 3.6 percent in 2023, it said.
In a separate note on the impact of the global energy crisis, the World Bank said an extended cutoff of energy supplies to the European Union could trigger a recession for the European and Central Asian countries.
The impact will be greater on countries more dependent on Russian natural gas and less on countries with access to alternate gas supplies or more domestic energy production.
The report notes that global prices for oil, gas, and coal had been picking up since early 2021 but they “skyrocketed” after Russia’s invasion and that helped inflation climb “to levels not seen for decades in the region.”
This is especially painful for countries that rely on imported energy and “countries closely connected with EU energy markets,” and the bank said countries should prepare for shortages.
The regional grouping includes Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Georgia, Kazakhstan, Kosovo, Kyrgyzstan, Moldova, Montenegro, North Macedonia, Poland, Romania, Russia, Serbia, Tajikistan, Turkey, Turkmenistan, Ukraine, and Uzbekistan.
Source: Copyright (c) 2015. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Ste 400, Washington DC 20036.