Ukraine’s government continues to function, the banking system is stable and debt payments are viable in the short term, but the Russian invasion could plunge Ukraine into a devastating recession, the International Monetary Fund said Monday.
And it warned that the war could have broader repercussions, including threatening global food security due to rising prices and the inability to plant crops, especially wheat.
At a minimum the country would see “output falling 10 percent this year assuming a prompt resolution of the war,” the IMF said in an analysis of the economy in the wake of the Russian invasion.
But the fund warned of “massive uncertainty” around the forecasts, and if the conflict is prolonged, the situation will worsen.
Citing wartime data for conflicts in Iraq, Lebanon, Syria and Yemen, the IMF said the “annual output contraction could eventually be much higher, in the range of 25-35 percent.”
The country’s economy grew 3.2 percent in 2021 amid a record grain harvest and strong consumer spending.
But in the wake of the Russian invasion on February 24, “the economy in Ukraine dramatically changed,” said Vladyslav Rashkovan, alternate executive director for Ukraine on the IMF board.
“As of March 6, 202 schools, 34 hospitals, more than 1,500 residential houses including multi-apartment houses, tens of kilometers of roads, and countless objects of critical infrastructures in several Ukrainian cities have been fully or partially destroyed by Russian troops,” the official said in a statement.
Ports and airports also have been closed due to “due to massive destruction,” he said.
Oleg Ustenko, economic adviser to Ukraine’s President Volodymyr Zelensky, last week estimated the damage at $100 billion so far.