Q1 2012 results: a subtle balance
Preliminary results of the economic development in the first quarter of 2012 demonstrated conflicting results: the projected inflation was overfulfilled (taking into account the traditional price-“boosting” during the last months of the year), while the GDP growth is still lagging behind the projected pace.
Consumer prices in March rose by 1.5% and since the beginning of the year by 5% (projected growth - 19% per year). Industrial producer prices in March increased by 1.6% and since the beginning of the year by 5.6%.
Belarusian Gross domestic product in January-March 2012 increased by 3% as compared with identical period last year and amounted to Br 105.6 trillion (projected growth - 5-5.5%). Investment in fixed assets has decreased by 15.1% to Br 23.5 trillion. 1 million 344.4 thousand square meters of housing were put into operation (increase by 5.3% compared with 2011). The volume of cargo traffic has decreased by 4.4% to 69.7 million tons, retail sales have increased by 7.4% to Br 41.1 trillion.
Industry – oil processing first of all, – was responsible for the GDP growth to a large extent. By mid-year the low base effect (in January 2012 processing of crude oil was almost stopped due to a conflict with Russia) will run out, which means, even a three percent increase will require new “boosts”. A significant reduction of investment in fixed assets implies the country is approaching a recession. Loan rates are falling, but there are few of those wanting to borrow. One more worrying factor is the growing number of unprofitable enterprises.
The desire of the authorities to “boost” the economy and to stimulate the economic growth is great. However, this desire is not translated into actions – the ACF of the EurAsEC is closely monitoring activities of the Belarusian authorities.
The third tranche has not been transferred ergo the economic authorities are not free in their actions. At the same time, the sowing campaign will start soon, which traditionally requires considerable borrowing, as well, all started construction will not be finished without additional financial injections. Consequently, conflicts, disagreements and debates between the authorities of Belarus and Russia will continue.