According to the British Broadcasting Corporation (BBC) and Reuters local time reported on March 14, the International Monetary Fund (IMF) recently released a report that if the current Russian-Ukrainian military conflict continues, the Ukrainian economy may shrink by more than one-third this year, fearing 35%.
The group said the country was already facing an economic downturn of about 10 percent as a result of the fighting, which affected Ukraine's major cities, destroyed local airports and triggered a refugee crisis.
Recently, the IMF has provided Ukraine with $1.4 billion in emergency financing, the upper limit set by the group, but the report notes that Ukraine may still need billions of dollars in financing funds. In an interview with the BBC, the governor of The Central Bank of Ukraine even argued that Russia's assets frozen abroad due to sanctions should be used for the reconstruction of its country.
Screenshot of the BBC report
The IMF reportedly made this "pessimistic expectation" for the Ukrainian economy in a report on March 7 before approving the $1.4 billion emergency loan last week. According to reports, these estimates are calculated based on economic data such as Iraq, Syria, Lebanon and other countries that have previously been wartime gross domestic product (GDP).
The Ukrainian economy is expected to contract by 10 percent in 2022 due to the Russian-Ukrainian conflict, but if the conflict lasts longer, the outlook for ukraine's economy could deteriorate sharply.
"With the war still going on and the situation still very unstable, there is huge uncertainty about any prediction at this stage." The report predicts that Ukraine's economy could even shrink by 25 to 35 percent, and the report's estimates should be considered "minimal."
Screenshot of the IMF report
According to the BBC, after the Crimean incident, the Ukrainian economy suffered a shock in 2014 and 2015, falling by 6.6% and 10% respectively. Last year, Ukraine, which relies heavily on exports, grew 3 percent economically, largely thanks to the country's record food production. According to the original forecast, Ukraine's economy will grow by another 3.6% in 2022.
For now, however, the IMF says: "In the context of the humanitarian crisis, a severe recession and huge reconstruction costs are expected. ”
According to the report released on March 7, the Ukrainian government is currently prioritizing defense and social pointing out and maintaining the liquidity of its external debt. Ukraine's woes could be even worse, with the country's current external financing gap of $4.8 billion, but its financing needs are expected to grow and will require significant additional concessional financing due to the war.
On December 14, local time, the first-floor building in Kharkiv, Ukraine, was shelled, and fire emergency personnel rescued at the scene. The picture is from the surging image
Reuters quoted an IMF official as saying the IMF was working to create a trust fund tool through which bilateral donors could channel resources to Ukraine. The official said the $1.4 billion in emergency financing that has been approved is the highest amount Ukraine can borrow under current IMF rules, but the loan has a "catalytic effect" in encouraging other donors.
In an interview with the BBC, Kyrylo Shevchenko, governor of Ukraine's central bank, claimed that Russian assets frozen abroad as a result of sanctions should be used to help rebuild Ukraine.
"The need for funding (for reconstruction) will be enormous." Shevchenko told the BBC: "It can be achieved through loans and grants from multinational organisations, as well as direct assistance from other countries. However, a large portion of the funds need to be obtained from the 'aggressors' as compensation, including assets that are currently frozen in our allies. ”
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