KYIV, June 8 - President Volodymyr Zelensky has said Wednesday that fighting for the city of Sieverodonetsk may decide the outcome of the war in the east of the country.

"In many respects, the fate of the Donbas is being decided there," he said as combat raged in the industrial belt with Russian and separatist forces, according to BBC. He said his troops were inflicting major losses on enemy forces.

But Ukrainian forces have been pushed back to the outskirts, according to the region's top Ukrainian official.

Serhiy Haidai, governor of the Luhansk region (which makes up the Donbas along with the neighboring Donetsk region), said special forces had pulled back after Russia "started levelling the area with shelling and air strikes".

"Our [forces] now again control only the outskirts of the city," he told local media. "But the fighting is still going on, our [forces] are defending Sieverodonetsk."

"It is impossible to say the Russians completely control the city," he added.

Some 15,000 civilians remained in Sieverodonetsk and the nearby city of Lysychansk, the governor said.

Russia said on Wednesday that Ukraine was suffering "significant losses in manpower, weapons and military equipment" in the Donbas.

The focus of the war switched to the east at the end of March after Russian forces pulled back from the region around Ukraine's capital, Kyiv.

In another development, UN chief Antonio Guterres warned that the consequences for the world of Russia's invasion were worsening, with 1.6 billion people affected.

"The war's impact on food security, energy and finance is systemic, severe and speeding up," he said.

In an interview for BBC News, World Trade Organization Director General Ngozi Okonjo-Iweala warned that the food crisis could last for years without intervention.

African countries could be hit especially hard by wheat and fertilizer shortages, she said.

Millions of tons of grain are sitting in warehouses and Ukrainian ports, unable to be exported because of the war.

Global banking experts believe Russia's economy will shrink 15% by the end of the year - and a further 3% in 2023 - because of Western sanctions, a mass exodus of companies and a collapse in exports. (bbc/ez)