TWN Info Service on UN Sustainable Development (Oct22/06)
25 October 2022
Third World Network

ECA: Child poverty soars due to Ukraine war, economic downturn
Published in SUNS #9673 dated 24 October 2022

Geneva, 21 Oct (Kanaga Raja) — An additional 10.4 million people in the Eastern Europe and Central Asia (ECA) region will go into poverty, including almost 4 million children as a result of the war in Ukraine and the subsequent economic downturn, according to a study by the UN Children’s Fund (UNICEF).

The study said that nearly three-quarters of these children are Russian even though the Russian Federation accounts for about one-third of the region’s population.

The increase in child poverty is about 19 per cent higher than the projected child poverty in the absence of the war and economic downturn, it added.

The study also found that in terms of infant mortality, an additional 4,500 children will die in 2022 before their first birthday (about 8 per 100,000 live births), while an additional over 117,000 years of compulsory schooling will be lost.

Countries in Eastern Europe and Central Asia region include Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kazakhstan, Kosovo, Kyrgz Republic, Moldova, Montenegro, North Macedonia, Romania, the Russian Federation, Serbia, Tajikistan, Turkmenistan, Turkiye, Ukraine and Uzbekistan.

According to the study, for the countries in Eastern Europe and Central Asia (ECA) region, specifically, but for numerous other countries reliant on food (wheat and grains), fertilizer, fuel supplies, trade, tourism, remittances etc. – either from or through the Russian Federation and Ukraine – the economic downturn related to the war in Ukraine follows closely on the heels of the COVID-19 pandemic, and a series of other country specific economic shocks.

The study said over the past two decades, the ECA region overall was growing economically. Despite four notable economic crises since 2006, real GDP per capita (USD PPP) in ECA region has increased from around $16,500 (2006) to $23,600 (2022).

Yet this trend hides how countries in ECA have been hit hard by crises, and growth has been repeatedly stifled, it added.

The global financial crisis (2008), the annexation of Crimea (2014) and the subsequent devaluation of the rouble (2015), and COVID-19 (2020), have all led to widespread disruption of markets and supply chains, falls in remittances, as well as falls in economic growth in the ECA region – and with serious implications for child poverty risks, said the study.

This is now true for the war in Ukraine, the study added, noting that estimates using the International Monetary Fund (IMF) growth forecasts from October 2021 and April 2022, shows that, in the absence of the war, the GDP per capita (USD PPP) for ECA would have reached $24,700 in 2022 from $23,300 in 2021.

With the war, it said, the GDP per capita (USD PPP) is still projected to increase for 2022, but only to $23,600, essentially meaning the war and subsequent economic downturn has cost the region about $1,100 PPP per person for the 424 million population – or approximately $462 billion PPP in total.

According to UNICEF, in response to both COVID-19 and the war in Ukraine, ECA countries have responded with fiscal and social protection measures to mitigate the effects.

However, said the study, there are key differences between the COVID-19 crisis and the Ukraine crisis – including refugee flows (the responses to this are coming from the international community), and in general, more limited fiscal and social protection responses at the national level call for sometimes unique, and sustained forms of social protection.

The region-wide effect of the economic downturn is truly a crisis for the poor, and a crisis for millions of children, said UNICEF.

The study said this is because across the region and within countries, the effects of the crisis – and specifically falls in remittances, and increases in food and fuel prices – are not experienced equally.

“Families with a higher reliance on remittances, and who spend a greater proportion of their incomes on necessities such as fuel and food – primarily the poor and those with more dependents – will be hit the hardest everywhere.”

The study said even though the drivers of each economic downturn are different, for the children and their families they affect, many of the economic and social consequences are the same.

The study said the most recent evidence from COVID-19 shows that as economic conditions in the region worsen, outcomes for children also deteriorate, leading to increased poverty risks, weaker school attachment, and increased infant mortality amongst other things.

“The current crisis is now piling on more misery for families and children, and worryingly is projected to be the starkest of all recent crises for the region,” it added.

The study said that a key concern is that many countries in the ECA region are heavily reliant on Russian markets, and forecasts predict that the economic contraction in 2022 will be the largest shock in the Russian Federation since the transformation crisis (1992) that followed the collapse of the Soviet Union.

Specifically, the study said the impacts of the war and subsequent economic downturn will be felt by children and families in three ways:

(1) Higher prices for basic goods (food and fuel) – with global effects – decreasing purchasing power, reducing real disposable incomes, increasing poverty risks.

(2) Disrupted trade and supply chains, and falling remittances – affecting mostly neighbouring countries – are further increasing prices and lowering real household incomes directly.

(3) Increasing uncertainty in business and investment will tighten financial conditions, and risk capital outflows from emerging markets – worsening economic conditions in the long-term, increasing poverty risks, and stifling recovery.

The total population for the region is about 425 million out of which 105 million (25 per cent) are children aged 0-17 years, the study noted.

“The weighted average real GDP per capita for the region was USD 23,300 in 2021, ranging from a low of USD 3,900 for Tajikistan to USD 31,600 for Turkiye.”

Sub-regional differences exist in the GDP per capita as well – ranging from about USD 12,300 in Central Asia to USD 25,600 in Eastern Europe.

In total, an additional 10.4 million individuals (about 2.5 per cent of the total population of the region) will fall into poverty due to the economic shock related to the war in Ukraine, said the study.

“Children will bear the large share of the shock as an additional 4 million children aged 0-17 are projected to live in poverty.”

This implies that children – who make up 25 per cent of the region’s total population – will account for 40 per cent of the increase in poverty, said the study.

Put differently, it said that an additional 3.6 per cent of children will experience poverty compared to 2 per cent of adults – highlighting the higher poverty risk for children as has been the case in many crisis situations.

In the absence of the war, an estimated 19.5 million children will have been in poverty, which represents about a 19 per cent increase in the child poverty rate, said the study.

In terms of infant mortality, an estimated additional 4,500 children will die before their first birthday due to the increase in poverty, it added.

The study also said it is projected that an additional 117,101 years of schooling will be lost (equivalent to about 2 per 1,000 children not attending school) – also driven by increases in poverty. +