Oil declines to $100 


Oil declines to $100 AND The World Bank expects Ukraine’s GDP to fall by 45%

The World Bank predicts that Ukraine’s GDP will decline by 45.1% in 2022

Evest follows market developments in the following report



Oil declines to $100 per barrel

The World Bank expects Ukraine’s GDP to fall by 45.1%



Oil declines to $100 per barrel

Oil prices are falling in Monday morning transactions after falling the previous week
with consumer countries taking action to free part of the oil from reserves and the coronavirus in China

Brent crude futures for June on the London Futures Exchange fell by $2.28 (2.22%), to $100.5 per barrel
As a result of Friday’s trading, these futures rose by $2.2 (2.2%) to $102.78 per barrel

West Texas Intermediate crude futures’ prices for May on the New York Mercantile Exchange
(NYMEX) fell by $2.27 (2.31%) to $95.99 per barrel
In the previous sessions, futures prices rose by $2.23 (2.3%) to $98.26 a barrel

Despite rising oil prices on Friday, last week’s prices ended lower
Brent lost 1.5% of its price, while West Texas Intermediate crude lost -1%

the oil market

The oil market has been volatile since the start of the Russian military operation on the territory of Ukraine
Investors are concerned about a lack of market supply due to the refusal of some countries to import Russian energy resources

IEA countries agreed to release 60 million barrels of strategic reserves in addition to the 180 million barrels
the United States planned to provide
At least in the short term, this is expected to help offset the decline in supplies from Russia

Carsten Fritsch, an analyst at Commerzbank, said that selling oil from reserves would, as expected
, significantly alleviate supply-side difficulties

In the meantime, China extended the lockdown in Shanghai, the country’s major industrial hub,
as part of measures to combat a new outbreak of COVID-19
“This means that a large Chinese business center of 25 million people
which accounts for about 4% of the country’s oil consumption,
is doomed to shut down,” Fritsch added

In the meantime, oil futures on Friday were supported by the Baker Hughes report
which showed that the number of drilling platforms in the United States
last week rose by 13 compared to the previous week, to 546 units



The World Bank expects Ukraine’s GDP to fall by 45.1%

World Bank report on the prospects of the economies of Europe and Central Asia in light of the military operation in Ukraine and its consequences

Earlier, the World Bank projected Ukraine’s GDP to rise this year by 3.2%, and in 2023 – by 3.5%

“Based on the international poverty line of $5.5 per day
the poverty rate (in Ukraine – IF) is expected to rise to 19.8% in 2022 compared to 1.8% in 2021
 with a further 59% likely below the poverty line,” the World Bank said in its report

According to the report
 modeling using the latest macroeconomic forecasts shows that the proportion of people whose incomes are below the actual subsistence level (national poverty line) could reach 70% in 2022, up from 18% in 2021
This figure will remain above 60% by 2025 in the absence of a massive post-war support package, according to the World Bank

Private consumption in Ukraine is expected to fall this year by 50%, while general consumption will fall by 10%
 and capital investment will fall by 57.5%
Exports of goods and services will fall by 80%, imports – by 70%, while public debt for GDP will rise from 50.7% to 90.7%
The consumer price index is projected to be 15% with an increase to 19% next year

World Bank experts expect

Ukraine’s current account deficit to be 6.8% of GDP this year and to expand to 16.8% in 2023
The World Bank expects the Republic’s economic growth to accelerate in 2024 to just 5.8% with inflation of 8.4%

The report added: “Growth is expected to exceed 7% by 2025 thanks to massive recovery efforts
with a slow recovery in manufacturing and export capacities and the gradual return of refugees
However, by 2025, GDP will be one-third below the pre-war level, 2021

The World Bank explains the lack of strong economic growth in 2022-2023 by the fact
that hostilities have destroyed a great deal of industrial infrastructure, including railways
bridges, ports, and roads, making economic activity impossible in large areas of the region
Trade in goods ceased almost as damaged transit routes prevented the movement of goods by road
and the loss of access to the Black Sea cut off half of Ukraine’s exports
and 90% of the grain trade and disrupted agriculture and harvesting

The extent of deflation (in the economy) depends largely on the uncertainty of duration and severity of the war
However, the consequences are expected to exceed a short-term collapse in domestic demand and exports
such as suffering from the destruction of productive capacity, the destruction of arable land and the reduction of labor supply,
especially if refugees do not rush to return or choose to remain permanently outside Ukraine

The World Bank also expects, “with the destruction and deterioration of physical capital and vital assets
together with (the negative impact of hostilities and the epidemic), recovery will be more difficult” if no major efforts are made