IS_BELARUSIAN_ECONOMY_SUSTAINABLE

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Transcript IS_BELARUSIAN_ECONOMY_SUSTAINABLE

IS BELARUSIAN ECONOMY
SUSTAINABLE?
Dr. Elena Rakova,
IPM Research Center
The structure of presentation
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The main achievements
The key factors of so called
‘Belarusian miracle’
The threats and bottlenecks
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1. The main achievements
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GDP growth (since 1996 - 1.9 times or 7% per year)
Considerable poverty reduction (from 45-50% to 15%)
Low unemployment (1.8%)
Increase in real incomes (average wage went up from
USD 50 to USD 250)
Export increase and the EU countries’ share increase
(doubled, it is 47% now.)
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However…
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The lowest pace of transition (according to
the EBRD indicators)
Very small share of private sector (15-20% of
the GDP)
Lack of privatization and restructuring
Total dependence on Russia
Insignificant amount of FDI
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2. The key factors of the Belarusian
miracle
Internal factors:
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Monetary policy and inflation
Soft budget constraints
Exchange policy and devaluation of national
currency
The policy of demand stimulation and active
protectionist measures
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2. The key factors of Belarusian
miracle
External factors:
 Integration with Russia
 Barter and write-offs of Belarusian arrears for
consumed fuel and natural gas
 Price increase for oil
 Economic growth in Russia
 Cheap prices for natural gas
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2. The key factors of the Belarusian
miracle
i.e. that growth can be explained by:
 Decent heritage of the Soviet era
(manufacturing capacities, infrastructure)
 Administrative resource
 Redistribution of incomes and welfare
 Favorable global market conjuncture
 Statistical tricks and manipulations (‘massaging
figures or ‘pripiski’)
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3. The treats and bottle necks.
External
 Cheap gas prices alongside with 100%
dependence on Russia and the very low
level of energy efficiency;
 oil products account for 33% of Belarusian
export, which is based on price difference
between Russian oil price and the world
prices for oil products (around USD 4 bn.)
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3. The treats and bottle necks
Internal
 Inefficiency (loss making or low level of net
value added) of the majority of Belarusian
enterprises (20 enterprises form 80-85% of
export and budget revenues)
 Extremely high level of subsidies
 Very high level of social expenditures
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3. The treats and bottle necks
Internal
 Underdeveloped financial and service market
 High costs combined with inability to reduce
them significantly (informal ban for firing
people, depleted assets, etc.)
 Low competitiveness and growing need for
protectionism
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Is Belarusian economy
sustainable?
Neither in short nor in long term perspective…
Market reforms could provide for considerable
adjustment and softening of forthcoming
shocks and economic problems…
But there is no political will to do so…
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More info on the IPM site
The IPM Research Center provides all kind of
economic analysis and expertise:
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Monthly economic review
Quarterly economic review (Outlook)
Quarterly review of Belarusian SME sector
Annual Monitoring of Belarusian Infrastructure
Annual Report on SME development
Policy and Working papers,
books, etc.
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