Ukraine fallout: World Bank sharply trims global growth forecast

The World Bank cut its forecast for global economic expansion this year on Russia’s invasion of Ukraine and is planning to mobilise a funding package bigger than the Covid-19 response for nations to deal with various resulting and ongoing crises.

The Washington-based institution has lowered its estimate for global growth in 2022 to 3.2 per cent from a January prediction of 4.1 per cent, President David Malpass told reporters on a call on Monday. The decline was spurred by a cut in the outlook for Europe and central Asia, which include Russia and Ukraine, he said. The global forecast for this year compares with 5.7 per cent expansion in 2021, he said.

The World Bank chief said he expects to discuss a new 15-month crisis-response package of about $170 billion to cover April 2022 through June of next year with the bank’s board in coming weeks, with about $50 billion of this amount to be deployed in the next 3 months.

“This is a continued, massive crisis response given the continuation of the crisis,” he said, adding that the new initiative will exceed the $157 billion mobilised for the initial phase of the pandemic.

The World Bank last month announced a $3 billion funding package for Ukraine that it expects to be approved and deployed over the coming months.

Missile strike on Lviv

Ukrainian authorities said a Russian missile attack killed seven people in Lviv on Monday, the first civilian victims in the western city, while its forces were preventing Russia from taking full control of the port city of Mariupol in the east where the situation was "extremely difficult".

Lviv governor Maksym Kozytskyy said preliminary reports suggested four hits on Lviv, which is just 60 km from the Polish border — three strikes on warehouses that are not currently being used by the military, and another on a car service station.

Putin’s counter

Russian President Vladimir Putin on Monday said the West “expected to quickly upset the financial-economic situation, provoke panic in the markets, the collapse of the banking system and shortages in stores.” He added that “the strategy of the economic blitz has failed.” The Russian leader spoke in televised remarks during a video call with top economic officials.

This even as Russia flagged a likely further cut in interest rates and more budget spending to help the economy adapt to biting western sanctions.

Russia faces soaring inflation and capital flight while grappling with a possible debt default.

Putin said that Russia should use its state budget to support the economy and liquidity when lending activity has waned. The World Bank expects the Russian economy to shrink by more than 11 per cent this year.

The central bank more than doubled its key interest rate to 20 per cent on February 28 as the first wave of sanctions hit, before trimming it to 17 per cent on April 8.

Mariupol still contested

The port city of Mariupol was still contested as Russian appeared to have sent reinforcements into Ukraine in recent days, a senior US defence official said.

“Our assessment is Mariupol is still contested... (it) remains under threat from the air but both from missile strikes as well as bombs from the air but even of course artillery,’ the official, speaking on the condition of anonymity, told reporters.

Ukraine to be EU candidate within weeks: President

Ukrainian President Volodymyr Zelenskyy formally submitted a completed questionnaire on European Union membership to an envoy on Monday and said he believed this step would lead to his country gaining candidate status within weeks. European Commission President Ursula von der Leyen handed the questionnaire to Zelenskyy during a visit to Kyiv on April 8, pledging a speedier start to Ukraine's bid to become a member of the EU.