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Withdrawal from Russia: Employees mothball goods in a Moscow fashion store run by a Japanese chain.
Photo: YURI KOCHETKOV / EPA
The European Bank for Reconstruction and Development (EBRD) estimates that the Russian economy will shrink by ten percent this year as a result of the invasion of Ukraine.
In its forecast published on Thursday, the bank predicted a 20 percent decline in gross domestic product (GDP) for Ukraine.
The Russian invasion of the neighboring country, which began five weeks ago, triggered the "biggest supply shock in 50 years," the EBRD said.
Before the Russian attack on Ukraine, the bank had predicted that Russia's economy would grow 3.0 percent this year.
For Ukraine, the EBRD had expected growth of 3.5 per cent.
The new growth forecast just released is the first one released by an international financial institution since Russia's war of aggression began on February 24, according to the bank.
In its assessments, however, the EBRD assumes that a ceasefire will be negotiated within a few months and that a “major effort to rebuild Ukraine will begin soon thereafter”.
Huge range of economic forecasts
In such a scenario, according to the bank, the Ukrainian economy could grow by 23 percent next year.
However, the Russian economy would remain at zero growth due to the likely continued sanctions.
The West has imposed massive financial and economic sanctions on Russia because of the war of aggression.
The EBRD was established in 1991 to support the development of the market economy in Central and Eastern Europe.
There are now also projects in the Middle East and North Africa.
In the case of Russia, however, the growth forecasts of many economic researchers differ widely.
This is also due to the lack of clarity that so far there is hardly any empirical data on how drastically the massive sanctions will affect the Russian economy and to what extent other suppliers such as China will step in.
In the meantime, the Munich ifo Institute had estimated the drop in Russia's gross domestic product at just one percent.
The Essen-based institute RWI, on the other hand, predicts a decline of 10 percent, similar to the development bank.
The current forecast by Finland's central bank, which traditionally studies Russia's economy particularly intensively, assumes the same magnitude.
She also assumes that the long-term growth prospects – already modest at 1 to 1.5 percent per year – would be reduced by the sanctions for a whole decade.
beb/dpa
