Industrial production is on the rise in Belarus
According to Statistics Committee, in August 2014 the industrial production performance surpassed the 2013 results. The overall industrial production increased, yet some industries are in recession due to the recession on the Russian market. Nevertheless, it is reasonable to expect that the industry will increase production volumes by the year-end. Meanwhile, mechanical engineering and some other industries will see layoffs.
The National Statistical Committee published data on industrial production in January - August 2014.
According to the National Statistics Committee, in January - August 2014 the industrial production index was 100.3% compared to the same period in 2013. It grew for the first time since early 2014. The production growth is accompanied by dwindling warehouse stocks. In June-August 2014, stocks reduced by BYR 2.7 trillion. The growth’s main drivers are steel production, chemical and mining industries. In January – August 2014, potash production increased by one-third, and Belarus’ oilfield services in Russia have increased the performance in mining by 39%.
Despite the growth, the situation in the industry is ambiguous. Performance in mechanical engineering, electrical equipment, rubber and plastic production has declined and these industries are in recession – mainly due to the reduced demand for Belarusian products on the Russian market.
Belarus’ food industry has gained some benefits from the Russian embargo on certain foods from the EU, however it is still premature to say whether the industry’s performance will reach the 2013 level.
In July and August Belarus was able to report growth in potash fertiliser production, however that was mainly due to the low baseline in 2013. In addition, since November 2013 Belarus started producing and exporting antioxidants and bituminous mixtures, which somewhat improved the performance results.
Short-term risks for the Belarusian industry are mainly linked to the situation on the Russian market. Imports of investment goods may be reduced due to sanctions and possible freezing of long-term projects, imports of foodstuffs may be increased, however, significant fluctuations in the RUR/USD exchange rate could make exports to Russia inefficient. Potash fertilisers, oil refining, mining and metallurgy might ensure the overall industrial performance growth, however, they would not solve local problems at large machine-building enterprises, which would be likely to resort to layoffs or introduce part-time working weeks.
The overall industrial performance growth was mainly due to the chemical and mining industries. The upwards trend in industrial production growth will persist, but the mechanical engineering would not show signs of recovery in the mid-term.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.