Page 38 - TURKRptJun22

38 I EBRD 2022 bne June 2022
Living in a time of turbulence
Ben Aris in Marrakech
The war in Ukraine is spilling out to affect the economies of the entire catchment area of the European Bank for Reconstruction and Development (EBRD), which includes Emerging Europe,
Central Asia and North Africa.
There will be an economic slowdown emanating with decreasing severity from the epicentre in the Donbas region of Ukraine, but while Ukraine will of course take the worst hit, the looming food crisis in North Africa and possible debt crisis caused by soaring inflation could possibly do long-term damage to the countries on the southern shores of the Mediterranean, say the EBRD experts.
The war in Ukraine has come at a bad time for many emerging countries in the region that were already weakened by the coronavirus (COVID) pandemic. Having spent heavily on support measures for their populations, the spike in commodity prices, especially energy, coupled with soaring inflation, which has forced central banks to make growth-killing rate hikes, has only added to the headaches.
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“All the post-COVID gains will now
be wiped out,” said the EBRD’s chief economist, Beata Javorcik, during
a panel discussion of the economic outlook for the region at the EBRD’s annual meeting in Morocco. “Many countries in the region already had depleted financial reserves and now the high inflation is driving up the cost of
of all its companies have temporarily ceased work and that territory that accounts for 60% of gross production is currently the scene of hostilities.
In addition to the destruction in Ukraine, another factor that will depress Ukraine’s recovery is that around 13mn people have been displaced, either internally or
“All the post-COVID gains will now be wiped out. Many countries in the region already had depleted financial reserves and now the high inflation is driving up the cost of borrowing that adds to their problems...”
borrowing that adds to their problems... Many countries that have not talked to the International Monetary Fund (IMF) for years are now opening talks as they work out a way to fund their countries.”
For Ukraine the EBRD expects a 30% GDP contraction this year. Javorcik estimates that between a third and half
who have left the country completely, out of a population of around 35mn.
“It’s the biggest refugee crisis since WWII – more than the refugees that fled Syria,” says Sergei Guriev, Professor
of Economics at France’s Institut d'Études Politiques (Sciences Po)
and former EBRD chief economist.