Brutal figures reveal Ukraine’s economic disaster

Asia Times ^

[FarCenter]

Economic consequences of the invasion

After losing a relatively modest 4% of GDP to the Covid-19 pandemic in 2020, the Ukrainian economy grew at a healthy 3.2% in 2021 and was expected to grow at the same pace in 2022. The sudden Russian invasion upset this forecast. The initial stage of the invasion hit the capital Kiev and ten regions, which jointly account for 55% of pre-war GDP.

Ukraine’s GDP shrank by 15.1% in the first quarter of 2022 – the year-on-year decline recorded in March 2022 was a massive 45%. In the second quarter, GDP fell by a staggering 37.2%.

Today, the fighting continues in the regions that account for less than 15% of pre-war GDP. But even so, the World Bank estimates that the Ukrainian economy will shrink by one-third in 2022, a far higher number than the typical threshold of 15% that economists use to start referring to a severe economic recession as an economic disaster.

Bar chart showing effect war on Ukraine's economy. Ukraine’s economy was recovering, until Russia invaded. State Statistics Service of Ukraine What makes the economic consequences of the war even more dramatic is that the aggregate numbers above have unequal distribution across the country and socioeconomic groups. One way to illustrate this is to look at the extreme poverty rate, defined here as living on less than US$5.5 per person per day.

Before the war, only 2.5% of Ukrainians lived in extreme poverty, similar to Italy and Spain. The war abruptly changed this. The World Bank estimates that the number of Ukrainians in extreme poverty will likely increase tenfold in 2022 and will continue to grow in 2023. The poverty rates will be higher still in the regions closer to the front line, due to shortages.

This will accelerate the inflation rate and erode purchasing power. Government support for the low and middle-income parts of the population is crucial in this situation.

[zek157]

Really, you question this premise?

Energy is directly linked to GDP. If you do not understanding of this there’s nothing I can show you. Remember this next year when you see the figures. Europe’s economy is certainly screwed at this point.

Trade is never one sided. If both parties do not benefit from trade it cannot continue. Russian gas and oil kept Europe going.

By the way French nuclear plants are running at about 50% capacity due to maintenance issues. They will not come to the rescue this winter replacing lost electrical generation.

[aMorePerfectUnion]

We will certainly see how it balances out…

But I’ve read middle eastern countries are purchasing Russian oil and sending it on.

But it seems (as one example) an industrial economy like Germany will not go into severe recession if the energy flow is drastically reduced - or if the supply shrinks jacking up prices of energy.

[caww]

And ‘WE’RE’ paying for Ukraines government to operate.

[Hiddigeigei]

There is an ongoing dispute on FR between people who support our involvement in the Ukrainian/Russian war and those that don’t. I’ve heard convincing arguments on both sides and a great deal of lies from both sides. Sad that free Americans can’t agree to disagree, and instead engage in insults and name calling. Whichever side wins; such wars are tragedies (except perhaps for politicians and the war profiteers).