Vital to move forward, but without overheating
How did the economy perform last year and what should we expect next?
By Victor Velikhanov
The Government has announced the preliminary socio-economic results from 2012, alongside the budget performance. Inflation was reduced significantly while the exchange rate stabilised and a positive balance of foreign trade was achieved. The consolidated budget for 2012 saw a welcome surplus.
However, according to the Deputy Economy Minister, Alexander Yaroshenko, GDP growth failed to reach the 105 percent forecast (standing at 101.5 percent). Sadly, the global potash market crashed, leading to a loss of over 20 percent of export volume — worth half a billion dollars.
We lacked sufficient investments in basic capital, owing to the rise in interest rates and limited available credit within state programmes. Nevertheless, the Economic Minister notes, “Our main task was to eliminate the macroeconomic imbalances of 2011, which we achieved.”
Rating with advantage
Positive trends have been observed in international rankings. In particular, the Foreign Direct Investment Magazine (published by The Financial Times) has called Belarus one of the most progressive reformers in Eastern Europe in the field of business development. “Belarus’ ranking is already much higher than that of its neighbours in Eastern Europe and Central Asia, and twice as high as that of Russia and Ukraine. It is only three places behind such heavyweights of foreign direct investment as Poland. Globally, Belarus is ranked 9th out of 185 economies for ease of starting up a business,” notes the author of the article, Courtney Fingar. Last year, Belarus rose to 58th place from its ranking of 115th (five years ago).
The real income of the population increased by 20 percent, with demand for non-food items rising, showing a higher standard of living. Inflation was kept within the forecast 22 percent, with growth largely inspired by free pricing and tariffs (which accounted for four fifths of the total rise in the consumer price index). Inflation should fall as economic efficiency improves: the 2013 forecast is for no more than 12 percent.
Deputy Finance Minister Maxim Yermolovich forecasts another balanced budget for this year, with social orientation. GDP is expected to rise by 108.5 percent, without the economy overheating, which can lead to artificial stimulation of domestic demand. According to Mr. Yaroshenko, modernisation of production, the creation of new enterprises, the attraction of foreign direct investments and the use of modern technologies and new management will make this possible.