The European Bank for Reconstruction and Development says that conflict in eastern Ukraine will lead to an even sharper contraction its economy than first expected this year, with the decline in output set to continue into 2015, when Russia’s economy will also shrink.
- Also warned that military spending is set to rise across central and Eastern Europe, likely adding to budget deficits and government debts in the region
- Expect economic growth to be stronger next year than this in most countries. To be sure, forecast downgrades were widespread in May, affecting Russia, Ukraine and 15 other economies.
- The most immediate economic victims of the conflict are Ukraine and Russia
- Ukraine’s economy is expected to contract by 9.0% this year and 3.0% next
- For Russia, the EBRD expects the best achievable outcome in 2014 to be a year of stagnation, followed a modest contraction in 2015. But it warned that the contractions could be steeper
- Said Russia is in no danger of exhausting its foreign exchange reserves, despite high levels of capital outflows
More at the Wall Street Journal, gated: EBRD Sees Sharper Economic Contractions in Russia, Ukraine
