WARSAW, May 14 (RIA Novosti) – The Ukrainian crisis may impact the global economy, especially developing countries, according to a report by the European Bank for Reconstruction and Development (EBRD) published on Wednesday.
“Under a more negative scenario, Russian economy would enter recession and output contraction in Ukraine would deepen. Coupled with increased risk aversion in global markets, this would bring growth in the EBRD region to a standstill. At this point, the Russia/Ukraine crisis would start impacting the global economy,” the report said.
The crisis in Russia and Ukraine has significantly affected the economies of the two countries and threatens to slow down the recovery in the wider EBRD region – or “even bring it to a complete halt,” the report said.
The EBRD operates in countries throughout Eastern Europe, Central Asia and the Caucasus.
“Since our forecast in January 2014, events in Ukraine/Russia have significantly increased geopolitical and economic uncertainty, with direct negative effects on the economies of Ukraine and Russia and potentially wider implications for the region as a whole,” the report said.
The bank’s basic scenario foresees growth in the transitioning region to slow further to 1.4 percent in 2014 from 2.3 percent last year, and compared with 2.7 percent in our January forecast.
The revision of forecast comes amid lowered expectations on the economic growth in Russia and Ukraine, which could impact neighboring countries and lead to deceleration in Turkey.
A modest pickup to 1.9 percent is possible next year, if the Ukrainian crisis does not escalate.
