Amid falling retail turnover, trade wars among Belarusian regions may escalate

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February 06, 2017 12:58

In 2016, retail sales decreased by 17% compared with 2015. The main reason for the fall in retail sales was a decline in wages and rising utility bills’ share in household spending. Amid further layoffs in the public administration bodies, regional officials will be interested in reporting maximum improvements in statistical indicators, which may lead to trade conflicts among Belarusian regions.

According to the National Statistics Committee, retail turnover in 2016 totalled BYN 36.2 billion and fell by 4.1% compared with 2015. In dollar terms, retail turnover totalled USD 18.2 billion and decreased by 17% due to the devaluation in H2 2015 and early 2016. In 2016, every Belarusian bought retail goods worth 5.3 average monthly salaries. This is the lowest consumer spending level in the last five years due to the increase in the share of utility services in a household budget.

The fall in retail turnover is linked to falling incomes. In Belarus, there is a direct correlation between a wage size and the retail trade turnover. Despite devaluation, as a rule, every Belarusian spent at least 5 monthly wages on retail consumer goods. New trade forms (e-commerce, retail service for buyers from the regions, mobile shops, etc), expansion of commercial networks in the regions and reduced trade on the markets have led to changes in the share of different types of trade in the overall trade turnover, but had no impact on the total consumer sales. Wage arrears or wage-cuts at the largest enterprises in the regions have led to a fall in retail sales.

In 2016, a new trend in retail turnover related to internet sales by retailers. According to the accounting methodology, retail sales accounted for the place of location of the commercial facility. Most online shops are located in Minsk and the Minsk region, but deliver across the country. As a result, regional purchases are reflected in the statistics of Minsk and the Minsk region, which may dissatisfy regional officials.

In the near future Belarusian public sector is likely to undergo further layoffs. When considering candidates for a layoff, their performance and performance of organisations and economic sectors under their supervision will be taken into account. Hence, regions may start trade wars in order to achieve most positive results, officials may protect local producers in local retail chains and put pressure on large retailers in order to preserve maximum turnover in their region. With regard to online shopping, large Internet shops may be required to hold separate accounts by region in order to incorporate their sales reports into the overall trade statistics by region.

Due to a drop in wages in Belarus, the retail trade turnover fell by a comparable amount. Amid layoffs in the public administration bodies, regional officials are likely to do their best to meet the projected performance indicators, which could lead to regional trade wars and attempts to change accounting methodology for large online retailers.

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