Creeping quality of life assurance. What awaits RB trade? — DV — 12/19/2022
For the support of Russia in the war of Ukraine against Belarus, he literally paid with the ruble. The sanctions imposed in the US this year have gone far beyond the punitive measures in 2021 and have affected major sectors of the economy. The EU, which last year was one of the main trade enterprises of Minsk, introduced a ban on the import of potash products, metals, agricultural products and oil products from Belarus.
“The result of this seizure was the closure of foreign trade, the seizure of exports, imports, and now Belarus’s foreign trade is turning from west to east,” Anastasia Luzgina, a senior researcher at BEROC, said.
The sanctions pressure, in fact, did not leave the structure of Belarus a choice in who to do business with. “Russia has become both a derivative and an investor of last resort,” said economist Yaroslav Romanchuk. “The growth of the Russian ruble in the currency basket to 60 percent indicates a dangerous convergence of the economies of total Russia and total Belarus. Lukashenka – due to the fact that he cut himself off . from the outside world – has now put the country on the verge of losing economic sovereignty.”
How Lukashenko struggled with the fall of the economy
“We see an economic downturn in the work of industry, and in a decrease in the income of the population, and in a decrease in the consumption of non-food products in the consumption basket,” says Anastasia Luzgina. Thus, according to Belstat, GDP in Belarus in January-October 2022 was observed at 4.7% compared to the same period last year.
Annual inflation in Belarus in September exceeded 17%. Although officials predicted that in 2022 this figure would not exceed 6%. For negotiations with inflation, on October 6, Alexander Lukashenko decided to approve and completely ban price increases. True, a week later, the authorities transferred and limited state regulation of prices for certain categories of goods.
Thus, in October and August, economists observed deflation. According to Belstat, in November, the growth in prices for food products amounted to 14.4%, non-food products – 14.5%, services – 9.8%. “This does not mean that the Belarusian economy has held its own. This means that it was divided into two parts, – explains Yaroslav Romanchuk. countries in the world where a 40 percent increase in cash in a year could keep inflation at 12-13 percent. It’s just not possible.”
“Systemic revival of the State Planning Commission”
For other problems – the strengthening of Western companies from the Belarusian market due to support for Russian aggression in Ukraine – the Belarusian authorities adopted the same approach from Soviet practice. On December 12, Lukashenka announced that the state would nationalize the property in the markets of foreign companies in Belarus.
“This is a blow to the image, now even companies from Asia are unlikely to invest in Belarus,” Luzgina suggests. Yaroslav Romanchuk led Lukashenka to replace private business with a “systemic revival of the state plan”: “Don’t want to work for us? I will do it for you, appointing officials to commercial positions.”
What awaits Belarus in 2023?
All recurring factors are expected to continue impacting business and repeating events in the coming year. “Such a creeping quality of life,” says Romanchuk. In his opinion, surveys of entrepreneurs already cover that in 2023, about 30-40 percent of respondents do not rule out closing their business.
The economist increases that the Belarusian authorities will increase the economy by reducing cooperation with the regions of Russia. And also to resume trade with the EU, for example, as a proposal with the transit of consumption from Ukraine through a port in Lithuania. “Lukashenko will be returned to the European agenda under the guise of further humanitarian projects,” Romanchuk suggests. “And where humanitarian aid and grain, you can imagine a couple of sacks of potassium.”
While the Belarusian authorities expect GDP growth in 2023 to be 3.5%, the EBRD believes that the Belarusian GDP will grow significantly and most likely will be close to zero. In the baseline scenario, the EBRD assumes a recovery growth of the Belarusian GDP by 0.3%. “If the sanctions pressure of the release is at the same level as now, one can see a slight recovery growth in 2023 as it comes to this year.
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