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The Economic Impact of War in Ukraine

By NAM News Room

Ukraine’s economy is facing more immediate damage from the war, but Russia’s economy will suffer more in the long run, according to The Wall Street Journal (subscription).

Ukraine economic projection: In a detailed assessment of the economic impact of the war, the European Bank for Reconstruction and Development projected that Ukraine’s economy will contract by about 20% this year. If a ceasefire can be negotiated in the next two months, the EBRD predicted Ukraine’s economy will bounce back strong and grow by about one-quarter in 2023.

The immediate impact: The parts of Ukraine most affected by Russia’s invasion account for about 60% of Ukraine’s economic output. About one-third of Ukrainian businesses have suspended operations since the beginning of the war. 

Russia economic projection: Though Ukraine is facing more short-term economic consequences from the war, the EBRD predicts that Russia will face more long-term economic challenges. The EBRD projected that Western sanctions will result in a 10% contraction of Russia’s economy this year. The EBRD did not forecast a rebound for Russia’s economy in 2023 and predicted that Russia’s economic prospects will remain weak in the years following.

Long-term challenges: According to the EBRD report, Russia will face serious long-term economic challenges from the war because of an exodus of well-educated workers and the loss of access to Western technologies caused by sanctions.

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