Belarus may encounter foreign trade deficit by late 2016
According to the National Statistics Committee, in October foreign trade deficit was the highest in 2016. The overall decrease in exports of Belarusian goods to foreign markets was due to a slump in prices on key Belarusian export items. Considering expected growth in consumer imports in November and December, current foreign trade surplus may not be enough for keeping overall foreign trade surplus after year-end.
According to the National Statistics Committee, foreign trade deficit in January-October 2016 was USD 2 965 million. In the same period in 2015, the deficit was USD 2 274 million. In October 2016, foreign trade deficit reached its maximum volume and totalled USD 545.5 million. The deterioration in foreign trade in October was due to the increase in natural gas supplies in connection with the beginning of the heating season, and cuts in oil supplies from Russia to Belarus entailing a decrease in petrochemicals export.
Belarus' foreign trade in 2016 was hit by a slump in prices on exported goods (by 16% compared with 2015), while import prices reduced by 9%. Exports of petrochemicals in January-September 2016 reduced by 38% or by USD 2 billion, due to the cuts in oil supplies from Russia from 2 million tons to 1.2 million tons per month. Negative trends also affected the second most important export item, Belarusian potash fertilisers. The average price for potash decreased as compared with 2015 by 25% and totalled USD 220 per ton, export volumes fell by 11% to 6.7 million tons, which led to an overall reduction in potash exports by USD 724 million. Exports of other Belarusian products could not compensate for these losses.
Thanks to exports in transport, construction and IT sector, Belarus managed to retain surplus in foreign trade in January-September 2016 at USD 390 million. In November and December consumer imports are likely to increase, reduced supply of oil will continue until early 2017, which means that export of petrochemicals is unlikely to increase. Re-exports of vegetables and fruits to Russia were scrapped; and import of natural gas will increase due to the winter season. Low prices on the potash market are likely to retain, which means that potash exports will not compensate for the increase in imports.
Overall, the seasonal increase in imports of natural gas and the negative price trends for key Belarusian export items have led to a sharp deterioration in foreign trade in October 2016. Foreign trade surplus in November and December 2016 is unlikely to compensate for the overall deficit of foreign trade in 2016.
According to Decree No. 221 of June 23rd, 2017, deadlines for the completion of foreign trade operations have been extended from 90 to 180 days for exports and from 60 to 90 days for imports. Delayed payments entailed a fine up to 2% of the transaction cost for each day of the delay, but could not exceed the total cost of the transaction. Most companies, when working with new counterparties, require a deferred payment for a period of three to six months. Due to the new regulation, violations are likely to reduce in number, so as the fines. Trade enterprises are likely to expand the assortment list due to the supply of new products in small lots, and the assortment list of exported Belarusian goods could expand, too. The new terms for completing foreign trade transactions would enable medium and small companies on the foreign trade market, exporters and importers are likely to grow in number and the geography of export-import operations could expand.