Photo: Tvie misto / Ivan Stanislavskyi
[For urgent updates please follow Ukrainian Freedom News on Telegram]
Ukrainians may lose a quarter of their domestic budget revenues due to the war, according to the calculations made by Arup Banerji, World Bank Regional Director for Eastern Europe. The World Bank experts predict that country’s household losses from the change of income and the rising cost of living will account for almost 25% of their budgets. In the worst scenario, the experts say, poverty might reach 58%. Economist Andrii Novak spoke about how the rise in prices has affected Ukrainians and whether a social catastrophe is still possible.
«The fact that there has been a significant increase in prices in Ukraine is logically explained by the consequences of hostilities on its territory. First, the logistics, supply of goods and some services are extremely disrupted, and second, the price of energy has risen sharply, which has led to an increase in costs for both producers and traders. Therefore, of course, Ukrainians in such conditions will have to seriously change the structure of their consumption and reduce it to the most essential goods and services.
Read also: We could have already paid 100 UAH for a dollar. What will happen with the currency further?
Everyone manages the funds individually, depending on their income and savings, and on their urgent needs on the other hand. A person who, ideally, lives in an apartment or a house has one need, a displaced person is in a completely different situation, and war victims have their specific needs.
Of course, the cost of living growth due to the sharp rise in prices for goods and services has certainly increased. But again, every person and family has their own situation. Some have savings, the so-called «financial cushion», some do not. Some have the opportunity to get help from family and friends, and some do not. The hardest part, of course, is for the refugees who are in a difficult financial situation. But there are state support programs and local support programs, volunteers help a lot too. Therefore, despite active large-scale military operations almost throughout Ukraine, a social catastrophe and even a social crisis, fortunately, did not happen in Ukraine.
I think this poverty rate (58% – ed.) Is very biased. Because by UN standards, the poverty line is $ 5 a day. If a person has less than $ 5 a day, it is already below the poverty line. But this is not an objective assessment, especially in countries that have their own currency, such as Ukraine, where the situation should be assessed not just in dollar terms, but in terms of purchasing power. According to this estimate, the purchasing power in hryvnia is a maximum of 3-4 hryvnias per dollar. What can be bought per unit of dollar in the country, where this currency originates from, and what can be bought per unit of hryvnia in Ukraine? Therefore, this indicator is slightly incorrect in methodological terms, in my opinion.
Fortunately, we do not have a social catastrophe or even a social crisis. Those programs, processes for migrants and those who need help and volunteer support, state support, allow almost all citizens of Ukraine to live in these conditions of war and enjoy almost every benefit of civilization.
There is no estimate of how much each Ukrainian loses, there is an estimate of the country’s total GDP and this estimate now has a very wide range – from 30 to 50%. The extent of GDP loss in 2022 is estimated, but it will largely depend on the development of the military situation at the front.»
By Andrii Novak, translated by Vitalii Holich
The author’s column is a reflection of the author’s subjective position. The editorial board of «Tvoe Misto» media hub does not always share the views expressed in the columns, and is ready to give dissenters the opportunity for a reasoned answer.
Follow us on Facebook and Instagram. Lviv Now is an English-language website for Lviv, Ukraine’s «tech-friendly cultural hub.» It is produced by Tvoe Misto («Your City») media-hub, which also hosts regular problem-solving public forums to benefit the city and its people.
