According to a report released on Friday by the World Bank, the Ukrainian government, and the European Commission, the invasion by Russia cost Ukraine about $97 billion in direct losses as of June 1 but it may take up to $350 billion to restore the nation.
According to the report, Ukraine had also suffered $252 billion in losses due to disruptions in its economic flows and production, as well as additional costs related to the conflict. Additionally, it was predicted that the displacement of one-third of the country’s population would increase the country’s poverty rate to 21 percent from just 2 percent prior to the conflict.
Overall, according to the assessment, Ukraine would need to spend $349 billion on reconstruction as of June 1—about 1.6 times its projected $200 billion GDP for that year.
Of that sum, $105 billion was required immediately to deal with urgent concerns like restoring more than 500 hospitals and thousands of damaged or destroyed schools. It was also crucial to make dwellings safe, restore heating, and buy gas in order to get ready for the next, undoubtedly harsh winter.
The study cautioned that all the figures were provisional and would probably increase as the war went on.
“The impact of the invasion will be felt for generations, with families displaced and separated, disruptions to human development, destruction of intrinsic cultural heritage and reversal of a positive economic and poverty trajectory,” it said.
The results, according to Arup Banerji, the World Bank’s regional country director for Eastern Europe, were based on a “very strong” international recognised approach and should serve as the foundation for a Group of Seven recovery summit scheduled for October 25 in Berlin.
He claimed that Ukraine’s initial projections that the cost of rebuilding its economy would be $750 billion were plausible extrapolations from the destruction and economic losses, but it was unclear exactly what approach had been taken to get that conclusion.
According to a post by Ukraine’s Prime Minister Denys Shmygal on Telegram, the report provided the first thorough damage assessment of the war’s effects on Ukraine and created the foundation for funding its recovery plan.
Ukraine needs pledges from donor nations that they will continue to give $5 billion in funds each month during the following year, according to Oleg Ustenko, a senior economic adviser to Ukrainian President Volodymyr Zelensky.
Banerji concurred that unless there was a “really drastic change in the course of the war,” Ukraine will require outside assistance till 2023.
He said the economy was doing “slightly better” than feared, and its gross domestic product was now seen declining by 30-35 percent in 2022 instead of the 45 percent contraction forecast previously.
Banerji claimed that the research had taken into account the expenditures necessary to “build back better” and aid Ukraine in updating its antiquated infrastructure.
He issued a warning, noting that how quickly rehabilitation would proceed would be much influenced by the outcome of the conflict and the capacity of the Ukrainian public and private sectors to absorb the funds.
“If you think of the enormous cost of housing, this will actually take many years, realistically, to be rebuilt and repaired,” he said.