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.