In the current assessment, Ukraine remains at the center of economic forecasting for Europe and Central Asia as the region confronts the fallout from ongoing conflict. Analysts foresee that the shockwaves from Russia’s invasion will reverberate through economies beyond Ukraine, with notable effects on developing economies across Europe and Central Asia. The World Bank’s latest regional briefing emphasizes that growth prospects have deteriorated since the pre-war outlook, reflecting the intense strain on trade, investment, and public finances in affected areas.
The Washington-based institution updates its regional outlook, noting that the war in Ukraine has become a key driver behind slower growth and greater uncertainty. Economies in this region face diverging trajectories, with some enlarging their output only modestly while others struggle with stronger headwinds caused by disruption in energy, supply chains, and fiscal needs. The broader message is that the war does not uniformly derail every country in the region, but a number of economies are expected to experience contractions or very weak expansion in the near term.
The World Bank now projects that the regional economy could contract by around 4.1 percent within the year, a sharp reversal from the 3 percent growth anticipated before the conflict emerged. This marks a sizable shift in the regional growth pattern and signals a substantial economic recalibration for Europe and Central Asia as the region absorbs the impact of the war and lingering pandemic effects.
The report characterizes the downturn as a recession of a magnitude comparable to the pandemic era, driven by direct economic blows from the conflict and the continuing aftershocks of the COVID-19 crisis. The combination of reduced external demand, heightened uncertainty, and the need for emergency fiscal responses contributes to a slower pace of activity across multiple economies.
Live | Ukraine reports that Russian forces allegedly removed radioactive material from Chernobyl, raising concerns about safety and security measures as the region navigates heightened tensions.
The World Bank projects that, within the broader region, some economies will face declines while others are expected to register only modest growth. Ukraine, Russia, Belarus, Moldova, Kyrgyzstan, and Tajikistan are anticipated to experience contractions, whereas several neighboring economies are projected to expand at subdued rates. These dynamics underscore the uneven nature of the post-crisis recovery across Europe and Central Asia.
The report highlights that not all countries within the region will experience a recession; some will stabilize with limited growth while others show modest momentum. Specific data for deeper regional players, including Spain and other Western economies, remains less explicit in this update, but the overall trend points to a cautious regional recovery rather than a broad, rapid rebound.
By 2023, the World Bank expects the aggregate GDP for Europe and Central Asia to grow, albeit at a modest pace just under 2.5 percent, reflecting a slow but positive normalization after the shocks of the period. The document stresses that country-specific outcomes will depend on a range of factors, including the duration of hostilities, policy responses, and external conditions such as commodity prices and global demand.
For Ukraine specifically, the World Bank’s calculations indicate a possible contraction as steep as 45 percent for the year, underscoring the magnitude of the disruption to production capacity and investment. The projection also emphasizes that the final outcome will hinge on the length and severity of the conflict, the speed of reconstruction, and the level of international financial support available to stabilize public finances and sustain essential services.
This view compares with the International Monetary Fund’s forecast issued earlier, which suggested a potential decline of up to 35 percent for Ukraine if the war persists. The Bank’s higher estimate reflects a more severe erosion of productive capacity and the gulf created by disruptions to labor, capital, and infrastructure infrastructure in the country.
Anna Bjerde, Vice President for Europe and Central Asia at the World Bank, underscored the urgent need for substantial financial backing to secure Ukraine’s economy and keep government functions operating while alleviating the humanitarian burden on citizens facing hardship and displacement. Her remarks underscore the critical role of international support in mitigating immediate hardships and facilitating a pathway to recovery.
In a broader regional development, the World Bank notes that Russia’s economy is projected to contract by as much as 11.2 percent in 2022, signaling a deep recession driven by unprecedented sanctions and external pressures. The analysis also points to a contrasting, but uneven, trajectory for neighboring economies such as Belarus and Moldova, which are forecast to shrink by 6.5 percent and 0.4 percent respectively, while Poland and Romania show healthier growth prospects in the near term.
Since the onset of the conflict, the World Bank has mobilized emergency financing to support Ukraine, launching a package around 925 million dollars as part of a broader aid plan currently under preparation. This funding is aimed at sustaining essential services and enabling a more stable transition toward reconstruction and growth in a highly challenging environment. These measures reflect the Bank’s ongoing commitment to assisting the region through its most difficult period.