PM Shmygal expects Ukrainian economy to shrink by 35%, maybe more

29 March, 02:53 PM
The Prime Minister of Ukraine Denys Shmygal (Photo:Denys Shmygal / Facebook)

The Prime Minister of Ukraine Denys Shmygal (Photo:Denys Shmygal / Facebook)

Russia’s launching of full-scale invasion and war on Ukraine will cause Ukraine’s economy to shrink by at least 35%, and perhaps more, Ukrainian Prime minister Denys Shmygal said on March 29.

Shmygal, in an interview with Interfax-Ukraine news agency, said his 40-million nation seen may of its labor force killed or wounded, while millions of refugees had left the country.

“We see that right now, with military action continuing and the shock of war still here, (the economy) might shrink by 35%, and maybe even worse,” the prime minister said.

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The war is affecting at least 10 Ukrainian regions that contribute as much as 50% of the nation’s output, added Shmygal.

“In the future, all will depend on how the economy and business recovers, and a lot depends on the exporting industries as they are restructuring (their logistical routes) from sea supplies toward railroad ones, through Eastern Europe. These matters will also have an impact on the GDP.”

Meanwhile, deputy PM and economy minister Yulia Svyrydenko estimates Ukraine’s losses from the Russian full-scale invasion at $564.9 billion. This figure was released on March 28.

Within this figure, infrastructure losses are estimated at $119 billion, and the value of the drop in 2022’s GDP – $112 billion.

The Energy Ministry has released its own calculations for losses in its sector: the energy industry suffered at least $2 billion in losses, it said.

Also, Sergiy Marchenko, Ukraine’s finance minister, has said that 30% to 50% of the national economy is not working properly as Russia continues its war against Ukraine.

The Finance Ministry is conducting negotiations with its international partners to attract EUR 6 billion in monetary aid. U.S. President Joe Biden has pledged to provide Ukraine with almost $14 billion – in monetary, military and technical support – signing a budget bill on March 28.

The move was accompanied with announcement of the tax reform that will introduce a wealth tax for U.S. citizens. The Wall Street Journal criticized Biden’s decision in an editorial.

The Kyiv School of Economics, an educational institution that provides graduate degrees in business and economic science, also made own assessment: According to it, Russia’s war has cost Ukraine $63 billion (UAH 1.8 trillion) as of March 24.

Cabinet of Ministers is considering making state-owned companies pay their dividends at a greater rate to guarantee the sustainability of the country’s national budget. The list of these companies includes major financial institutions – Privatbank, Ukreximbank, Oshchadbank and others.

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