header -->

Belarus’ government projects GDP growth at 2% in 2015

Category status:
April 22, 2016 19:00

On October 31st, the government issued a statement projecting GDP growth forecast for 2015 at 2%. This somewhat constrained optimism is due to the fact that Belarus will only be able to fulfil her projections if the external economic environment is favourable. However, so far, the external economic situation is not in Belarus’ favour and she has no means influence that.

In January-September 2014, Belarus’ economy grew by 1.5% (annual forecast is 3.3%), which was mainly due to growth in retail trade and industry. The retail trade grew thanks to nominal wage growth (compared with 2013) and industrial performance at Belaruskali and Belarusneft. Growth in sales of potash and petroleum products had a positive effect on the wholesale trade performance. The construction industry had a negative impact on GDP due to the completion of several major modernisation projects.

In 2015, the government projected GDP growth at 2% (IMF and WB – at 1.5% and EBRR – at 0.5%). The growth is projected due to greater proceeds in the modernised industries, i.e. woodworks and metallurgy. Potash production in 2014 has reached its capacity and has limited opportunities for further growth. Oil refining may count on larger production capacity only by 2016, thus will be unable to show substantial growth in 2015. In 2015, the government is planning to launch new projects in the pulp and paper industry; however, the demand may be lower than projected. In addition, people’s real wages are not projected to grow considerably in 2015, which will restrict growth of trade and consumer goods production.

The economic forecast for 2015 may not be fulfilled also due to external factors, such as the situation in the Russian economy. US and EU sanctions have led to the devaluation of the Russian ruble and the decline in real incomes. Russia’s investment activity is limited. Banks have problems with accessing financial markets, which has reduced Russia’s ability to finance the economy. For Belarus, it means a drop in demand for consumer goods (furniture, appliances, and cars), machinery (trucks, mining and road construction equipment) in 2015. To improve the profitability of export supplies, food producers will have to increase prices, which may lead to a decrease in exports of goods instead of the projected increase.

In 2015, the Belarusian economy will not have many sources to ensure growth, and everything will depend on the favourable external economic situation. If Russia continues her self-isolation policy, Belarus’ economic growth plans may be hampered, so as it would reduce the demand for Belarusian products in Russia amid fluctuating Russian rouble exchange rate.

Similar articles

Minsk attempts to make up for image losses from military exercises by opening to Western values
October 02, 2017 11:49
Image: Catholic.by

The Belarusian authorities regard the Catholic conference as yet another international event to promote Minsk as a global negotiating platform. Minsk’s proposal to organise a meeting between the Roman-Catholic Church and the Russian Orthodox Church is rather an image-making undertaking than a serious intention. However, the authorities could somewhat extend the opportunities for the Roman-Catholic Church in Belarus due to developing contacts with the Catholic world.

Minsk is attempting to lay out a mosaic from various international religious, political and sportive events to shape a positive image of Belarus for promoting the Helsinki 2.0 idea.

Belarus’ invitation to the head of the Holy See for a meeting with the Patriarch of the Russian Orthodox Church should be regarded as a continuation of her foreign policy efforts in shaping Minsk’s peacekeeping image and enhancing Belarus’ international weight. The Belarusian authorities are aware that their initiative is unlikely to find supporters among the leadership of the Russian Orthodox Church in Moscow. In Russia, isolationist sentiments prevail.

In addition, for domestic audiences, the authorities make up for the lack of tangible economic growth with demonstrations of growth in Minsk’s authority at international level through providing a platform for religious, sportive and other dialogues.

Recent trends