header -->

Economic modernization as one of the main reasons for the negative trade balance

Category status:
April 22, 2016 18:36

The foreign trade deficit in July 2013 was USD 446.5 million.

Implementation of extensive economic modernization plans has resulted in a slump in export  growth performance in 2013. Modernization in Belarus entailed a sharp increase in capital equipment imports, disabling improvement in merchandise trade. In addition, negative developments in external markets will further increase the trade balance deficit.

The initial plan for export growth in Belarus in 2013 was 15.2 % as compared with 2012. In H1 2013 the forecast not only failed, but lagged behind 2012 exports by 20.7 %. In 2013 international trade was gradually deteriorating. In Q1 2013 the largest negative foreign trade balance was registered in February - minus USD 246.4 million. In Q2 the minimum value (minus USD 272.8 million) was in June and the maximum - minus USD 447.3 million – in April. July 2013 data repeated the worst result in 2013, when foreign trade balance was minus USD 446.5 million.

Compared with 2012, the lack of solvents and lubricants exports in foreign trade balance had a negative impact on foreign trade performance. Belarus lost USD 3.4 billion on lubricant exports and raw materials imports reduced by USD 2.4 billion. Compared with January-July 2012, in 2013 foreign trade balance fell by USD 4.2 billion, which implies that lubricant exports had significant, but not decisive, impact on the foreign trade performance.

The capital goods situation is also negative. In H1 2012, the trade surplus for this product group was USD 502.4 million and in 2013 trade deficit was USD 414.3 million. According to modernization plans, haulage companies have sharply increased automobile trucks imports to renew their fleet. Supplies of manufacturing equipment for the construction of dairy farms have increased, as well as power grid equipment purchases. Against the background of falling Belarus’ cargo and agricultural machinery exports to Russia, investment imports exceeded investment exports.

Economic modernization in Belarus meant to improve the competitiveness of Belarusian goods in foreign and domestic markets. However, so far, new equipment imports have not resulted in greater exports to international markets. Despite the construction of a large number of dairy farms, dairy exports have not increased – on the contrary, they have decreased compared with 2012. Over USD 1 billion was spent on modernizing cement plants, but only few were able to slightly increase their export volumes. A sharp rise in foreign currency proceeds should not be anticipated. Despite renovating power grids, electricity imports have not reduced. The competition is increasing on international markets (Russia and the EU) due to the economic slowdown, which results in Belarus losing its market shares due to the low competitiveness of Belarusian goods and services.

Thus, the foreign trade situation is deteriorating while modernization fails to bring positive results. The forecast is that the international trade situation will continue deteriorating,  particularly bearing in mind problems with potash exports from Belarus.

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