Non-existent GDP growth

April 22, 2016 18:24

On January 16, Belstat assessed GDP growth in 2012 at 1.5%.

2012 Government’s GDP growth plans have not been implemented. GDP growth at 1.5% has been achieved via ‘solvent’ schemes and due to altered GDP calculation methodology. In 2013, if there are no similar schemes, 2013 forecast is unlikely to be implemented. 

On November 3, 2011 the Presidium of the Council of Ministers approved social and economic development forecast for 2012 with GDP growth rate at 1-1.5%. This forecast was rejected by Lukashenko and readjusted upwards up to 5-5.5%. By the end of 2012 the original forecast turned out to be the most accurate base on the actual results. 

GDP growth in 2012 was achieved through solvents and lubricants supply schemes, which added 2.5-3% to GDP growth. Moreover, in 2012 GDP calculating methodology has changed. It became possible to include industrial subsidies, which resulted in an increase of net taxes on products and GDP. Without these alterations, 2012 GDP decreased relative to 2011.

In 2013, the forecast for GDP growth is 8.5%. Solvent schemes have been declared illegal and are not feasible in the previous volumes. Russia will respond quicker if similar schemes occur. There is still no annual balance for oil supply. Supply volumes, most likely, will be approved quarterly, allowing control over the supply of petroleum products back to Russia.

Another source for GDP growth will be increased construction, primarily by increasing housing construction in the regions. However, the focus will be on population’s equity, which significantly narrows the number of those who have sufficient resources for construction. Without massive governmental loans, construction plans are not feasible.

Therefore, the Government has no realistic plans and sets unrealistic goals with predictable outcomes. Modernization of the country is long overdue and will not be able to produce significant results in a short period of time, i.e. one year. It will be a success if 2013 GDP growth rate is maintained at the level of 2012.