Ukraine's economy could contract 40% in 2022 due to Russian invasion

Ukraine's economic ministry has said that the country's economy shrank 16 per cent year-on-year in the first quarter of this year due to Russia's invasion.

Citing preliminary estimates, it has also predicted that the Ukraine's economy could contract 40 per cent in 2022.

"Areas in which remote work is impossible have suffered the most," it said in a statement.

The war campaign has deeply disrupted the Ukrainian economy. It has forced the country's central bank in Kyiv to limit the exchangeability of its hryvnia currency in order to preserve its reserve of dollars and euros.

Banks across the 27 EU nations have shown reluctance to accept hryvnia from the millions of refugees who have entered the European Union. They are afraid of being refused the transaction by the central bank in Kyiv.

European Union statistics agency Eurostat has said that spiralling energy bills and disruptions caused by the war in Ukraine caused consumer prices in the eurozone to surge by a new record of 7.5 per cent.

Europe has found itself caught in an oil and gas crunch due to tensions with Russia over its invasion of Ukraine.

European Central Bank (ECB) president Christine Lagarde has warned that a prolonged Ukraine conflict will keep energy prices and the cost of living spiralling, blighting a post-Covid recovery.

Ukrainian President Volodymyr Zelensky has said Russian forces were leaving behind “a complete disaster” as they retreat from the north, including towns just outside Kyiv.

“They are mining the whole territory, they are mining homes, mining equipment, even the bodies of people who were killed,” he said.

“We are moving forward, moving carefully,” Zelensky added however the Ukraine president said the situation in the east remained “extremely difficult” as Russian troops were "preparing for new powerful blows".

An additional $300 million in military equipment to Ukrainian forces will be provided by US Defence Department. Pentagon press secretary John Kirby said in a statement the new package “represents the beginning of a contracting process to provide new capabilities” to Ukraine.

(With inputs from agencies)