GDP growth behind the economic imbalances
On March 13th, 2013 Statistics Ministry reported about 4.4% GDP growth in January-February 2013.
Against the background of the industrial production slowdown in Belarus, the government continues insisting on the planned GDP growth. GDP growth is secured by changed calculation methodology and the usual means’ application. Artificial heating of the economy results in increased economic imbalances and a possible repetition of the 2011 economic crisis.
Industry generates over one-third of the Belarus’ economy added value. In the first two months in 2013 industrial production decreased by 0.4% compared with in the same period in 2012. Industry cannot help the government to achieve the planned GDP growth rate at 8.5% in 2013. Therefore GDP will be growing due to investment in fixed assets and equipment and due to warehouse stocks growth.
In January 2013, the warehouse stocks increased by BYR 5 trillion, enabling GDP growth: the unsold output was taken into account when calculating GDP by production. In 2012, the methodology for calculating net taxes on products was clarified, allowing for the calculation of industrial subsidies and excluding them from the subsidies on products, thereby increasing the GDP. In February 2013 investment in fixed assets increased significantly – both, due to increased procurement of equipment, construction and installation works, and due to the changes in the calculation methodology. Wholesale trade has gone up due to the resumed sales of potash fertilizers – regardless of the reduced contract price – only supplies’ volumes are calculated.
February socio-economic indicators show an economic slowdown. Freight traffic and retail sales have reduced, agriculture is facing certain problems. Against this background, the industrial modernization looks more like a race: who spends the allocated funds in the shortest possible time. Investment import increases, deteriorating Belarus’ payments balance. The reduced cost of loans will increase the demand for the cheap national currency and will heat the inflation.
Thus, the government chose to repeat its mistakes of 2009-2010. Instead of a balanced growth, GDP growth rates will be achieved by any means, leading to the inevitable result. GDP growth based on domestic demand requires significant investment. But the investment conditions in Belarus are not the most attractive. Therefore, in order to avoid the repetition of the 2011 crisis, the government should change the strategy.
President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.
President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.
The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.
The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.
The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.