Ukraine’s GDP Is Expected to Fall by 35% Because of War: New Forecast by IMF

Even if the war in Ukraine ends soon, the loss of life, destruction, and flight of citizens will impede economic activity for many years to come.

This forecast was released as part of the updated World Economic Outlook by the International Monetary Fund.

"For Ukraine, all projections for 2022–27 except Real GDP are omitted due to an unusually high degree of uncertainty. Real GDP is projected through 2022", the report reads.

According to IMF, the 35% drop is broadly in line with the evidence presented in the “Macroeconomic Costs of Conflict” research on the most severe conflicts published in 2021. According to this study, ten years after the start of the conflict, GDP per capita is still about 28% lower, largely due to a nearly 25% drop in private consumption.

In addition, the conflict is also linked to a sharp decline in official trade, with exports estimated to fall by 58% and imports by 34% ten years after the start of the conflict.

In general, due to the war unleashed by Russia against Ukraine, the IMF lowered its forecast for global GDP growth in 2022 from 4.2% to 3.6%, and in the next from 3.8% to 3.6%, and also increased expectations inflation: in developed countries this year – from 3.9% to 5.7%, in developing countries – from 5.9% to 8.7%.

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