In 2013 the economic growth will be attributable to domestic demand

April 22, 2016 18:16

 

The Ministry of Economy’s plans for 2013 indicate that the old ways to accelerate the economic growth will be used. The risks of external markets shrinking and vague shapes of the ‘new’ economic policy imply that projected parameters may not be achieved.

Last week, the Ministry of Economy published a report by Economy Minister Nikolai Snopkov “Projected social and economic development of Belarus in 2013”.

The Ministry of Economy plans to base the Belarusian economic development until 2015 mainly on the growth in domestic demand. A detailed diagram of projected economic growth in 2013 by economy sectors shows that old methods, proven by time and repeated devaluations will apply to pump the GDP up. Growth of the added value in construction is projected at 8%.

Construction workers’ salary increases, used to retain workers, will impact on the cost of a square meter. Increased housing construction plans will require additional loans, mostly on preferential terms as the population cannot cover the construction costs from their own savings. In previous years this has resulted in the emission pumping of the economy and economic imbalances. The repetition of this scenario is highly probable. If there is a serious resistance to increasing of the preferential lending, this growth level will be unattainable.

Trade growth by 11% indicates a possible increase in incomes due to higher wages. This will impact on the growth of costs at industrial enterprises and the current trend (loss of traditional markets and even of some partners) may deteriorate due to the decreased competitiveness in foreign markets. Against the background of the possible crisis, even 3.7% export growth is questionable. The suspended solvent sales will not allow for the chemical industry’s growth up to 13% in the coming year.

The report is internally inconsistent: on the one hand, it points to a new high-tech sector, which will be created through FDI and on the other hand, it shows a downward trend in the share of high-tech products in all exports. Moreover, the business environment for investments in Belarus is even worse than the Customs Union partner countries. Given the way the existing business liberalization directives are implemented, optimism in this part seems overly ambitious.

Therefore the projected results are hardly achievable. The ‘traditional’ ways of pumping the economic growth carry the risk of 2009 and 2011 crisis recurrence against the background of the due high foreign debt repayments.

 

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Belarusian authorities could give way to potent opposition in local councils
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The Belarusian authorities could to step up the opposition representation in local councils, should party members demonstrate potency. The Belarusian leadership is unlikely to have the resources to ensure 100 percent pro-government candidates in the local elections. The authorities have exhausted the grassroot support and have no funds to pay for the loyalty.

The Belarusian Central Election Commission has proposed to hold the elections to the local Councils of Deputies on February 18th, 2018.

The president has repeatedly emphasised the importance of the local councils in the power system and the state machine always tried to ensure the necessary local election results. Candidates have been decreasing in number with each elections and the authorities dealt with that by reducing the deputy corps. That said, during the rule of President Lukashenka, his electoral base has changed substantially. Over the past decade, most Belarusians have moved to cities and lost their local roots. The rural population is ready to support the president, but rural residents are constantly decreasing in number.

The Belarusian leadership is likely to permit broad participation in the election campaign and an increase in alternative representatives in the local councils. However, the opposition would have to boost its activity, so as so far it has been passive in defending its interests. In addition, the authorities, while determining the date for the local elections, have taken into account the fact that the opposition is usually the least active in the winter time.

Overall, both, the opposition and the local authorities have exhausted their grassroot support, however new local leaders may still come on political stage, although the party opposition has not yet shown sufficient aspirations.