Russia’s invasion of Ukraine has already caused nearly $1 trillion in damage. The damage is five times higher than Ukraine’s annual gross domestic product (GDP) before the Russian invasion in February this year.
In terms of direct and indirect costs, Ukraine has suffered “about $1 trillion” in damage, Oleg Ustenko, economic adviser to President Volodimir Zelensky, said at an event organized by the German Council for Foreign Relations in Berlin. The government official previously made an estimate of the war damage in the first two weeks of the battle. It was $100 billion at the time.
The destruction caused by the war poses a “significant problem for government funding”, he said. Also, companies that have not been destroyed by the Russians, according to the official, are not working at full capacity or only run for a few hours a day. As a result, the government receives much less money than originally expected.
Despite drastic cuts in government spending, the Ukrainian government has been running a deficit of €5 billion a month since the invasion, the official said. In 2023, that deficit is expected to decrease to about 3.5 billion euros per month. Western allies, meanwhile, are rushing to the aid of Ukraine to fill the gap. The World Bank, the European Union and the G7 countries have already pledged billions in financial aid to the country.
The Ukrainian government expects the economy to shrink by 35 to 40 percent this year as a result of the war, the official said. That is the deepest decline in GDP since 1991, he said. Ukraine declared its independence on August 24, 1991, after a coup by conservative forces failed in the Soviet Union. In December that year, the population voted for independence in a referendum. A few weeks later, the Soviet Union ceased to exist.
ALSO READ: Defense furious with Foreign Affairs about delivery of armored howitzers