“Russia does not give enough money.” Belarus and consequences
Since the beginning of the year, Belarus has lost about 50,000 workers – within a few months, employment in the economy is 4,197,200 people, which is a historical low. In January, their number increased by 4,244,600.
For the first six months, GDP is already projected at 6%, it is assumed that 10% by the end of the year will be the most significant drop in the last 25 years.
The consequences of such a fall became a verdict, the first wave was cases of mass protests inconsistent with the results of the elections in 2020, and then with the war in Ukraine. The EU imposed a ban on the import of Belarusian oil, refined products, metals, and agricultural products. The expansion of coverage against the potash industry was agreed back in March. Export of Belarusian goods to the EU is registered: from January to June (until data Eurostat) revealed more than 2 billion 400 million euros. In June – two times less than in January.
Last year, the EU accounted for 24% of exports from Belarus. 41% – to Russia. Belarusian Deputy Prime Minister Piotr Parkhomchik stated that the growth of Belarusian exports to Russia has increased by 1.3 times over the past six months, but due to income growth in the amount of 16-18 billion dollars (this is a third of last year’s exports).
Rising prices and low wages lead to impoverishment of the population. According to SATIO (Belarusian center of system business technologies. – Approx. RS), half of Belarusians have enough savings for a period of about a month in the case of a source of income. Immeasurable savings, they are afraid of losing even a meager job. Unemployment benefit in Belarus is 27 Belarusian rubles (converted to 10 US dollars).
The economies of Russia and Belarus are taken in different ways. By data IMF, Russia’s GDP in 2022 will decline by 6% against the March forecast by 15%. In Russia, according to polls, two to three families, that is, 65%, do not have airbags (it is believed that this is savings in the amount of six salaries after taxes and insurance).
Lev Lvovskya senior researcher at the Belarusian Economic Research and Education Center (BEROC) believes that the sanctions policy will hit the Belarusian economy more painfully than the Russian economy.
Trade with Ukraine has actually been reduced to use, with the EU it has greatly decreased
– The sanctions policy towards Belarus is only formally not as terrible as in Russia, because the number of people taken against Russia is greater, more toxic, when they seem to leave without any sides and refuse to deal with Russia. However, the sanction against Belarus has a much greater effect than the sanction against Russia. There are several reasons for this. First, Belarus is a small and open economy. We do not have a very large domestic market, and it is very important for Belarus to be built in the international value chain, so the decision on Belarus is hit harder. The second reason is that in Belarus there are serious calls for participation in the war in connection with mass repressions and election fraud in 2020. So there is a cumulative effect. Russia continues to sell oil and gas, the embargo on Russian oil. partially. But the Belarusian most important export goods are already under sanctions.
– Like potassium, for example? (In May of this year, Alexander Lukashenko proposed to ban the ban on the transit of potassium in exchange for the transit of Ukrainian imports through Belarus.
– The problem with its export is that it used to be sold through the port of Klaipeda, but Lithuania abandoned its mass for the export of Belarusian potash, and now it is being transported to China in wagons, but this is not at all the capacity. A port will be built in Russia or the Regulation of Port Regulation for the trade of Belarusian potash, but so far this is all at the level of plans and negotiations.
– What about Belarusian oil products?
– Belarus bought Russian oil cheaply, processed it, added a little of its own and sold Ukraine to the device. For Ukraine, it is a very important trading partner, unlike Russia, which has not traded with Ukraine since 2014. For the same it was an extremely important market for the sale of petroleum products in Belarus. Now our trade with Ukraine has actually been reduced to a minimum, but with the EU it has greatly decreased.
– And if we return to the sanctions imposed against Belarus in 2020? They acted as limited?
– They were introduced with a big lag. It started with point cases, for example, for random reasons. Then the conditions of deferred action were introduced, that they begin to operate in six months, and so on. Plus, in 2021, the prices of world goods, which were just produced by Belarus, rose sharply. These are wood, food, potassium. And this compensated for the loss of Belarus. And now the full penalties are expected, which came into force in 2020 and 2021, they also coincided with the new sanctions implemented with the war. All this together gave a fall in Belarus’ GDP as a percentage of Russia’s fall in GDP.
– And what keeps records of business in Belarus?
– The Belarusian IT business, for example, has become unparalleled. This was a very important part of the economy, much more important than in Belarus in Russia. The last decade to half of the economic growth has created a small growth but fast growing IT sector. After the beginning of the repressions in 2020, a wave of outflow of IT specialists came out, but it went relatively smoothly, but with the outbreak of the war, the relocation of IT greatly intensified. Many companies simply could not work in Belarus anymore, with the participation of investments, could not use services from Belarus, they were simply afraid of mobilizing their employees. At the beginning of June, a new economic situation happened. If earlier it grew by an average of 8% per year, now by June 2021 it has grown by only 1%, and by July it occurs by more than 8%.
– Do Russian injections into the Belarusian share continue at present in sufficient amounts for Lukashenka?
– Infusions continue, and this is the main economic hope of Alexander Lukashenko. Right now, for example, Russia has agreed to some billion-dollar import substitution projects. The fall in Belarusian exports to the EU and Ukraine, although partially offset by exports to Russia. Mutual visits of Russian and Belarusian politicians to discuss 2020 have become much more frequent. Each such visit begins and ends with a discussion of which loans Russia agrees to either choose Belarus or go to refinance the state debt. At the same time, we see that Russia does not give enough money for dumping, economic consequences for Belarus, and refers to the status of a co-aggressor in the war.
“After the start of the war, there was a surge in resolution. Is this a one-time surge, or is it already possible to talk about the display now?
We rolled back 10 years
– This is normal, people run to buy goods, companies run to buy equipment until it disappears on the market. Others buy apartments to save their money if they have that kind of money. Inflation is slowing down. Adding this share in both Russia and Belarus. Imports fell more than exports, which means that inflation from the eurozone is passed on to us less. But there are also factors that work against regulation. First, we have a depression in consumer demand. Time costs are expected to decrease. The government of Alexander Lukashenko is confident in the safety of money. For some time, Belarus has been the world’s test pulse due to persistent emissions uncertainty. Just recently, Lukashenko was just recalling at some factory how he ordered the chairman of the National Bank to print money and thought that he had outwitted everyone so much that no one noticed it. Now Belarus is also starting to gain such a policy. The current management of the National Bank is against such income, but, apparently, their opinion no longer concerns anyone, and it is assumed that such an amount is coming, there is an increase in the monetary base. In the Development Bank, many issues go through it, it allegedly imitates bonds of Belarus, and then the National Bank buys and releases money into the banking system.
– How much is the issue?
– We are talking about several billion rubles. But if Russia does not reduce the increased pressure, then the Belarusian decline is reduced more and more often when running towards this mechanism, and this reduces the pro-inflationary pressure. Well, if they relax completely there, then there is always the risk of hyperinflation.
How is the real estate market doing? After all, many left and became victims of the sale of an apartment at a cost below the market? Was it worth expecting this surge in demand, in connection with?
– Just the opposite. Many have left, but they are not selling their apartments yet, because they hope that they will return to Belarus after some time, they hope for changes in Belarus. There is a strong drawdown in the rental housing market, it has become much cheaper. But the purchase of real estate holds. This is because people don’t know how to save money and investing in their research is the application of the method in all our countries. They take a bank loan in rubles. The construction industry is also on the decline. You can be affected by the facts on the salary of builders, which decreased by 8.5% in terms of emotions. If nothing changes in Belarus, repressions continue and more and more people leave, and those who have already left lose hope of returning, then housing prices will go down, of course.
– How has the fall in GDP changed on the wallets of Belarusians?
– The fall in GDP by June is more than 10%, this is very serious. consumption that high growth rate increased by 1%, so we rolled back 10 years ago. Salaries react with a lag to the movement of GDP, so far, from January to June, salaries increased by 2.7% compared to the same period in 2021. However, this was a high salary in its speed, for January-May the same figure was minus 2.1%. If they all fell by 3%, that’s okay, but the problem is that some people earn serious salaries, while others are stable. For example, covid allowances were removed from doctors, and salaries were reduced by 17% over the year. In people detained at logging, they decreased by 14%. For oil workers, metallurgists, railway workers, they fell by 10%, – says Belarusian economist Lev Lvovsky.