Russian attack The war is also destroying the Ukrainian economy: economic damage has already risen to $ 600 billion

Economic|The Russian attack

Russian the attack on Ukraine has caused immeasurable and inhumane suffering. In addition, the Ukrainian economy is in an unprecedented predicament, from which recovery will take several years or, in the worst case, decades.

According to estimates by the Kiev School of Economics and the Ministry of Economy of Ukraine in early April, the economic damage caused by the Russian attack has risen to at least $ 564-600 billion (€ 523-556 billion).

The damage can be compared to the fact that Ukraine’s gross domestic product of 41 million people last year was $ 181 billion, according to the International Monetary Fund (IMF).

More than a week ago, the World Bank estimated that Ukraine’s GDP would collapse by 45 percent this year. The estimate is preliminary because the collapse is affected by the duration of the war and the fierceness of the war: the longer the war lasts, the greater the economic damage.

Economic history professor emeritus Sakari Heikkinen considers that the damage is very great, but it is very difficult to estimate how long the economic recovery will take.

“Assuming the war doesn’t last for years, some sort of peace will be agreed soon, most of the land will remain in Ukraine, very many of the fugitives will return home and Ukraine will receive very large foreign funding for reconstruction, I would expect the economic recovery to take several years rather than decades. “

In the worst case, the war will last for years and a significant portion of production capacity will be destroyed.

“It is possible that the economic recovery could take decades, especially if many of those who fled the war did not return and Ukraine lost a significant part of its land,” says Heikkinen.

Kiev direct and indirect damages have been taken into account in the assessment of the School of Economics and the Ministry of Economic Affairs. Indirect damage includes the collapse of GDP, a stagnation of investment, the flight of labor abroad and rising defense and social spending.

It is estimated that the attack that began on February 24 has destroyed 533 educational institutions, 300 kindergartens, 196 health care units and 129 factories or warehouses in Ukraine. A total of 6,800 residential buildings have been destroyed or damaged, with a total area of ​​26 million square meters.

In addition, 54 government buildings, 260 bridges and overpasses, 10 military airports, eight business airports and two ports have been destroyed in the war. More than 22,000 kilometers of roads have been destroyed.

Ukraine the government has estimated government spending to be $ 5 billion higher in revenue in April and a deficit of $ 7 billion in May.

“If the Western states failed to provide very significant financial assistance for the reconstruction of Ukrainian society and economy, it would be quite a moral bankruptcy. I consider it possible that agriculture, which is vital to the Ukrainian economy, could recover relatively quickly in conditions of peace, ”says Heikkinen.

In any case, the 45% GDP collapse predicted by the World Bank would be very large. Heikkinen takes, for example, the worst collapse in Finnish history.

“Finland’s gross domestic product shrank by 33 per cent in the Civil War in 1918, but already in 1922 the gross domestic product grew to the pre-war level. On the other hand, not as many people left Finland to flee the war, not much production capacity was destroyed and the economy recovered driven by exports, ”says Heikkinen.