Sanctions against Russia caused many countries to struggle

On May 10, the European Bank for Reconstruction and Development (EBRD) warned, the sudden stop of imports Russian gas could send emerging economies in Europe, Central Asia and North Africa back to pandemic GDP levels.

Many countries in the aforementioned region, including some 40 economies stretching from Mongolia to Slovenia and Tunisia, depend on Russian gas, and a sudden supply shutdown would reduce GDP per capita by 2, 3% this year and 2% in 2023, according to the latest report from the European Bank for Reconstruction and Development.

“Europe is discussing stopping buying hydrocarbons from Russia,” chief economist Beata Javorcik told Reuters. It is also possible that Russia will stop supplying gas to Europe.”

EBRD estimates that economies in the region grew 6.7% last year after shrinking 2.5% in 2020, as COVID-19 rattles the global economy and financial markets.

However, Russia has cut off gas to Poland and Bulgariawhile markets are focusing on the impact of the EU embargo on Russian oil as well as how to pay for gas by ruble which Russia set a deadline at the end of this month.

The EBRD warned that the gas shutdown would deal the biggest blow to EU member economies that depend on Russia for gas, crude oil and energy, such as the Czech Republic, Hungary and Slovakia.

The abrupt halt to Russian gas imports is not part of the EBRD baseline assessment, which the bank assumes for its calculations that gas distribution continues. Even then, the EBRD forecast is slower than its March estimate, with growth forecasts falling from 1.7% to 1.1%.

EBRD economists also cut their 2023 growth outlook to 4.7% from an estimate of 5% in March, citing price pressures.

“Recent spikes in food and energy prices have added to already high inflationary pressures as global demand recovers as COVID-19 restrictions are being phased out,” the report said. .

Hyperinflation has put pressure on poorer economies such as North Macedonia, Morocco, Egypt and Jordan, where food accounts for more than 25% of the consumer price index. Average inflation in emerging economies in Europe, Central Asia and North Africa amounted to 11.9% in March 2022, approaching levels last seen at the end of 2008.

GDP of Ukraine is forecast to drop 30% by 2022 instead of the 20% drop expected two months ago.

The Russian economy is expected to shrink by 10% and stagnate by 2023.

“Nine years of growth will be wiped out,” Javorcik added, noting that the big impact of Russia sanctions will be seen in the medium and long term. “Russia is being excluded from the global source of knowledge and that is the biggest price to pay.”

Growth for Turkey, the largest recipient of EBRD funds, is projected at 2% in 2022 and 3.5% next year, driven in part by government spending ahead of national elections. in June 2023.