Belarus will meet inflation forecast for 2016
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.
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.