image source,ANATOLIA / GETTY
Since the Ukraine war, whether the oil and gas produced by Russia can continue to be exported to EU countries has become the focus of attention.
The World Bank said Ukraine’s economy will shrink by nearly half this year, or 45.1 percent, due to the impact of the war.
The agency predicts that the economic damage of the Russian invasion across Eastern Europe and parts of Asia will exceed that of the Covid-19 pandemic.
The World Bank says the conflict in Ukraine has shut down half of the country’s businesses, cutting exports in turn.
World Bank Vice President Anna Bjerde believes that Ukraine urgently needs large-scale financial support.
The World Bank has so far provided nearly $1 billion in aid to Ukraine and has pledged to provide another $2 billion in the coming months.
Ukraine’s Black Sea shipping has been cut off, reducing the country’s grain exports by about 90 percent, and half of its total exports, the agency said.
Ukraine is the world‘s largest exporter of sunflower oil, and the cessation of exports has affected global food prices.
image source,Getty Images
Ukraine is an important food exporter in the world.
The World Bank said the war had shut down economic activity in much of the country and disrupted farming and harvesting operations.
“The scale of the humanitarian crisis caused by the war is staggering,” Bied said. “The Russian invasion has dealt a huge blow to Ukraine’s economy and has done a huge amount of damage to infrastructure.”
The World Bank said the 45.1% contraction estimate did not include the impact of infrastructure damage, which would further hinder future economic output.
Russia is in deep recession
image source,EPA
International sanctions have made Russian people feel the pain of soaring prices.
Although the Ukrainian economy was the most injured in the war, the World Bank believes that Russia’s economy has also fallen into a deep recession due to sanctions by Western countries.
Western sanctions include cutting ties with Russian banks, targeting Russian politicians and oligarchs, and bans on luxury goods imports and flights.
The agency expects Russia’s economy to contract by 11.2% in 2022 due to the impact of sanctions.
While the United States has banned imports of Russian oil and gas, the European Union has not. Because a quarter of the latter’s oil and 40% of its natural gas come from Russia.
EU countries continue to pay Moscow up to 800 million euros (£674 million; $884 million) a day for energy bills, which is estimated to be equivalent to 40% of Russia’s revenue.
Ukrainian President Volodymyr Zelensky said in a video address on Thursday that democracies must embargo Russian oil and completely prevent Russian banks from entering the international financial system.
“Some politicians are still unable to decide how to limit the flow of petrodollars and petroeuros to Russia so as not to put their own economies at risk,” Zelensky said.
more sanctions
The European Union has proposed a long-term plan to make Europe independent of Russia’s fossil fuel supplies by 2030.
image source,AFP
Beixi No. 2 Natural Gas Pipeline
In the short term, the EU formally adopted new comprehensive sanctions against Russia last Friday, including a ban on imports of coal, wood, chemicals and other products, and it is expected that total imports from Russia will drop by at least 10%.
The measures also prevent many Russian ships and trucks from entering the EU, further weakening trade and will ban all transactions with four Russian banks.
The ban on coal is the EU’s first ban so far on energy imports from Russia and will take full effect from the second week of August. No new contracts can be signed from last Friday. Existing contracts will have to end by the second week of August, meaning Russia can continue to receive payments for coal exports from the EU until that time.
The European Commission estimates that the coal ban alone will cost Russia 8 billion euros a year in lost revenue, more than European Commission President Ursula von der Leyen has previously said doubled.
The EU has so far not banned the import of oil and gas products from Russia, which are worth about 100 billion euros a year.
In addition to coal, the new EU sanctions prohibit the import of many other goods and products from Russia, including wood, rubber, cement, high-end seafood products such as fertilizers, caviar, and spirits such as vodka, with an estimated additional value of $55 per year. billion euros.
The combined value of these import bans represents at least 10 percent of the EU’s annual purchases from Russia, an EU official said. This does not include previous import bans on the steel industry. Overall, the value of all imports from Russia is expected to be cut by as much as a fifth due to direct sanctions.
The EU has also restricted exports to Russia of some products, including jet fuel, quantum computers, advanced semiconductors, high-end electronics, software, sensitive machinery and transport equipment, worth a total of 10 billion euros a year.
Combined with the previous ban on exports of other technologies, about a quarter of total EU exports to Russia have so far been affected, an EU official said.
image source,Reuters
Russia is also an important exporter of fertilizers and grains, and the war has had a profound impact on global supplies.
Broad influence
In addition to Russia and Ukraine, Belarus, the Kyrgyz Republic, Moldova and Tajikistan are also expected to fall into recession this year, according to the World Bank.
Growth forecasts for all economies were downgraded due to the war, and growth in the euro area was also lower than expected.
Asli Demirgüç-Kunt, chief economist for Europe and Central Asia at the World Bank, said, “The war in Ukraine and the outbreak have shown once again that crises can cause widespread economic damage and reduce per capita income and development over the years. The results are going backwards.”