Eastern European economies weakened by war in Ukraine

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When the war in Ukraine broke out, Beata Nowak didn’t hesitate long before jumping into her car and racing to the Ukrainian-Polish border. “My apartment had a free room since my roommate leftexplains this 36-year-old Warsaw woman, who works in the restaurant business. I said to myself: you have a place to collect a person fleeing the bombs, it is your duty to do so. » Since March 9, it has been hosting Anna, a student from the Kharkiv region. “We live together on my salary and I will welcome him as long as it takes”, she assures. Before entrusting: “But with inflation, the end of the month is getting more complicated. »

More than 4 million Ukrainians have fled their country since the Russian invasion, first taking refuge in neighboring countries – starting with Poland, but also Hungary, Romania and the Czech Republic. “I don’t know a person around me who doesn’t help refugees in one way or another”, observes Grzegorz Sielewicz, economist at Coface, in Warsaw. Beyond the human drama, the war in Ukraine will also profoundly disrupt the economies of Eastern Europe.

The delicate integration of Ukrainian refugees

“This unprecedented influx of Ukrainians is a huge short-term challenge, but also, in some ways, a possible long-term opportunity,” summarizes Pavel Sobisek, economist at UniCredit, in Prague. Initially, their reception will increase expenditure – public and private – for accommodation, care and education. Researchers at Capital Economics estimate their increase in the order of 1% to 3% of the region’s gross domestic product (GDP) over the next twelve months.

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Before the war, Poland, Hungary and the Czech Republic faced a major shortage of labour, linked as much to the dynamism of the economy as to demographic changes – low birth rate and emigration. Could Ukrainian refugees make up for this lack? “Not easy, because most are women with children, who hope to leave quickly, while local needs are strong in industry and construction, where jobs are more masculine”, summarizes Grzegorz Sielewicz. In addition, many Ukrainians employed in these sectors in Poland have returned to their country to fight – which, in the short term, intensifies labor shortages.

“For those refugees who will remain by choice or necessity, full entry in the labor market will require significant investment in vocational training and language learning by host countries. So many expenses which will be largely “reimbursed”, in the following years, by the income taxes paid by the refugees and their contribution to society”, adds Ljubica Nedelkoska, specialist in the subject at the Complexity Science Hub Vienna, an Austrian research center.

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