Belarus will meet inflation forecast for 2016

December 12, 2016 10:44
Image: Komsomolskaya pravda

In January - November 2016, consumer prices in Belarus grew by 10.1%. Unlike in recent years, there were no major price hikes in 2016 due to the stability of the BYN exchange rate and frozen pay rises. The forecast for inflation in 2016 at 12% will be met, which will allow to reduce interest rates in the economy.

According to the National Statistics Committee, in November 2016, consumer prices rose by 0.8% and overall inflation since the beginning of the year totalled 10.1%. In 2016, housing and utility services costs grew most rapidly: technical maintenance costs increased by 63%; lift usage, heating and sanitation costs by more than 40%. Housing and utility costs went up due to the government's plans to reduce cross-subsidies in the economy in order to end subsidies entirely by 2018. Food prices went up by 9.4% in 2016 and prices on other consumer goods by 7.4%.

In previous years, devaluation was the main driver of price hikes in the Belarusian economy. Devaluation of the Belarusian rouble led to higher prices for imported goods. In addition, Belarusian producers used a lion’s share of imported raw materials, which led to subsequent price hikes on domestic products. In January-November, 2016, the Belarusian rouble depreciated against the US Dollar by 6.3% and against Euro by 3.3%. People’s additional income thanks to pay rises was absorbed by a rise in the utility costs, leading to reduced demand and lower prices on imported consumer goods.

According to the government's forecast for 2016, inflation should not exceed 12%, which would be the minimum value for the last six years. Housing and utility costs will continue to increase in early 2017. As a rule, prices on seasonal fruits and vegetables go up in December. Hence, in order to contain inflation in December, the authorities are likely to fix prices on some produces and announce sales on a wide range of food and non-food items. In addition, the regulatory bodies may implement price monitoring in trade networks and apply administrative measures to suppliers and manufacturers who increased prices unreasonably. In 2016, Belarus is likely to fail most economic forecast indicators and the economic authorities will aspire to demonstrate positive trends in the economy. Thanks to administrative means, inflation in 2016 is likely to remain within the limits of the forecast, which will allow to lower interest rates in the economy and reduce the enterprises’ debt burden vis-a-vis the banks.

Overall, the stability of the Belarusian rouble in Belarus has had a moderating effect on prices. Taking into account the administrative resource possibilities, the inflation forecast for 2016 will be met and interest rates in the economy will continue to reduce.

Similar articles

Belarusian authorities resume political cycle: repressions follow liberalisation
March 27, 2017 10:42
Фото: Vasily Fedosenko/Reuters

The Belarusian authorities have revived the cyclical political agenda, including preventive crackdown with the use of force during the Freedom Day rally in Minsk and a loyal attitude to the participants in the opposition events in the regions. The protest rally in Minsk has evidenced that the Belarusian society has freed from the post-Maidan syndrome and showed high self-organisation capacity during the event in the absence of opposition leaders. In the future, the authorities are likely to expand the framework for sanctioned and legal activity for the moderate opposition in order to reduce the potential for street protests.

The Freedom Day march in Minsk on March 25th, 2017 was marked by unprecedented and brutal detentions before and during the event.

The Belarusian leadership has managed to stretch in time the political cycle - liberalization followed by repressions - and move beyond the electoral campaigns. Simultaneously, Minsk has demonstrated a rather high mobilisation potential under political slogans, despite the pressure from the state media and security forces before and during Freedom Day, including the presence of armed officers and new special equipment to disperse demonstrations in the streets of Minsk. That said, in other towns (Vitebsk, Gomel, Brest and Grodno) the Freedom Day march led by the opposition, was sanctioned by the local authorities (except Vitebsk), albeit there were fewer participants than in February and March protests against the decree on social dependants.

The Belarusian leadership has depersonalised (removed leaders) the protest, preventively weakened the protest movement, and has not opted for the harsh crackdown like in 2010 with many injured and hundreds arrested. For instance, some party leaders were preventively arrested or detained (Lebedko, Rymashevsky, Gubarevich, Neklyaev, Logvinets, Severinets) before the event. Nikolai Statkevich has disappeared and his whereabouts are currently unknown. Some could not pass through the police cordons (Yanukevich and Kostusev) or participated in the rallies in the regions (Dmitriev, Korotkevich and Milinkevich).

Despite the lack of protest leaders, some demonstrators managed to self-organize and march down the Minsk centre. The march was unauthorised but gathered several thousand participants. Many were detained by the law enforcement and later released without charges. In addition, the Belarusian law enforcers used some tactics of the western riot police against peaceful protesters, allegedly in order to mitigate the criticism from Western capitals.

Nevertheless, the Belarusian authorities have used the entire set of propaganda and power mechanisms applied during the highly politicised 2006 and 2010 elections - criminal prosecution of the opposition leaders, preventive detentions and arrests of activists, harsh propaganda campaign in the state media and, finally, the crackdown on the protest action in Minsk with the use of force.

Overall, the mobilisation potential of the Belarusian society remains high and the authorities are likely to expand the legal framework for public participation in politics in order to absorb superfluous tension.