Industry drags Belarusian economy down
Decline in production has been the major trend in most industries in Belarus. The main factors responsible for such a decline include recession in Russia, which is the main export market for Belarusian enterprises. In the medium-term, the overall economic decline is very likely in Belarus due to the industry’s role in different economic sectors and the lack of opportunities for improvements.
According to the National Statistics Committee, in March 2015, industrial production index dropped by 10.3% to March 2014. With the exception of oil refining and electric power industry, industrial production has declined in Belarus.
Mechanical engineering has been hit the hardest. In Q1 2015, MTZ tractors production reduced by 35.4%, MAZ trucks and dump trucks – by half, and BelAZ dump truck production – by 33%. Machine tool industry, production of harvesting equipment and TV sets also has seen a significant decrease in production.
The general decline in production is associated with a significant decrease in investment demand in Russia. Truck market in Russia decreased by half in January – February 2015. The devaluation of the Russian rouble has significantly reduced financial capacities of Russian agricultural enterprises.
The situation is also unfavourable for other industries exporting to the Russian market. Prices on dairy products fell by one-third, leading to heavy losses for Belarusian exporters. Until March 2015, potash industry had somewhat reduced the negative trends in the industry. However, in March potash production fell by 11.5% to March 2014, due to the production record set in 2014.
In the past, the government had addressed crises in the industry with various state subsidies. In 2015, however, the state budget is depleted. The Russian market in 2015 is unlikely to recover, and other stable and large buyers of Belarusian trucks would not appear. In April – September 2015, despite the signed contract with China for potash supplies, Belarus’ chemical industry would not outperform 2014 and would not reverse the overall negative trend. Production growth in oil refining is insufficient to compensate for the drop in production in most other industries. The situation in the industry would have a direct impact on the wholesale and retail trade, transport and construction, resulting in a further economic slowdown in the medium term.
Belarus’ industry situation continues to deteriorate because of the recession on the main export market, i.e. Russia. In the absence of financial resources for the incentive-based measures, the industry will have a major negative impact on the economy.
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.