Ukraine is being virtually destroyed, and the war has led to a mass exodus of its inhabitants and will cause its economy to fall dramatically
The war in Ukraine has been going on for two months now and has no end in sight in the short term. The situation is entrenched and Russia continues to try, with increasing brutality and destruction, to overthrow the Ukrainian government.
This situation, in which the country is being practically destroyed and is suffering a massive exodus of its inhabitants, will cause its economy to fall dramatically. According to the World Bank, Ukraine’s GDP will plunge by 45.1% by 2022, i.e. by almost half.
For its part, Russia, the invading country, will fall by more than 11%, although it is already in recession. In its case, this decline is related to the sanctions imposed by Europe to strangle its economy, which may have an even greater effect in the medium and long term.
Therefore, we see how economic ruin is added to all the desolation caused by a war conflict. Something that has happened in the rest of the great wars of history.
How much does an economy suffer in war?
Let’s look at World War I, which was basically an economic war. It lasted four years (1914-1918) and there were countries that saw their economies grow in the period and others, just the opposite. The Allies increased their GDP (Great Britain, Italy and the United States), but the Central Powers and the neutral countries suffered a hard setback (Ottoman Empire, Austria…), although there were some Allies who also lost, such as Russia and France.
Although the worst part was taken by Germany. There are no official figures about the fall of the GDP in its case, but it is known that the country’s debt (due to the expenses of the war) shot up from 5,000 million marks in 1914 to 156,000 million marks in 1918.
World War II obviously made matters worse. Although Germany was coming from a golden economic era, as the Nazi regime managed to increase GDP by 50% and end unemployment, the war caused it to fall by the most in its history. It is estimated at around 33%, but it managed a rapid recovery that made the country one of the most economically stable in Europe.
Figures similar to those recorded by the United States in its Civil War, which lasted from 1861 to 1865. As early as 1861 there was a 14.5% recession, according to the National Bureau of Economic Research (NBER), which rose to 23% between 1865 and 1867.
So we see that, even though we are talking about big wars, Ukraine is going to be hit harder by this conflict than the rest of the countries. A blow from which it will take a long time to recover. Even more so as the war is expected to be a long one.
First the Ukrainians have to manage to win the war and then it will be seen how the reconstruction of the country will be carried out. Perhaps it will receive a mini Marshall Plan?