Tuesday, May 24, 2022

Ukraine war latest: Putin in a cage he built himself, says UK – BBC News

Copyright: Getty Images

Image caption: Russia is trying to boost its currency by threatening to halt gas exports unless they are paid for in roubles

Russia’s economy is set to shrink by 10% this year and Ukraine’s gross domestic product (GDP) by as much as 20% as the conflict results in “the greatest supply shock” for 50 years, according to a forecast by the European Bank for Reconstruction and Development (EBRD) on Thursday.

Prior to Russia’s invasion of Ukraine on 24 February, the London-based bank had forecast Ukraine’s GDP would expand by 3.5% this year and the Russian economy would grow by 3%.

The bank says its latest forecasts “assume that a ceasefire is brokered within a couple of months, followed soon after by the start of a major reconstruction effort in Ukraine.”

Were this to play out, Ukraine’s GDP should rebound by 23% next year, while sanctions-hit Russia would be set for zero growth.

Meanwhile, the lender says the global economy faces “the greatest supply shock since at least the early 1970s”.

“Russia and Ukraine supply a disproportionately high share of commodities, including wheat, corn, fertilizer, titanium, and nickel.”

The bank predicts higher prices for such commodities will have a “profound impact” on global economies, hitting lower-income nations particularly hard.

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