Posted:
25.11.2021 10:03:00
Solid groundwork for tomorrow
For nine months of this year, the gross domestic product totalled 102.7 percent. What is important is that the forecast for this period has been exceeded with good progress. In general, the economy is developing on a qualitative and balanced basis. High growth rates ensure the maximum fulfilment by the state of its social obligations. Industry has traditionally been the main contributor. In addition, the service sector is gradually recovering. We asked the Minister of Economy Aleksandr Chervyakov to analyse the results of nine months and conduct a SWOT analysis.
Growth drivers
— Despite all the negative forecasts of various experts, the Belarusian economy continues to develop dynamically while also demonstrating fairly good performance in the context of the pandemic. What is the reason for the growth and what are the drivers of growth today?— Industry remains the locomotive of the economy. The industrial production index amounted to 107.9 percent.
Thus, we are growing not only at the expense of traditional commodity items, but also high-tech, innovative products, on which the stake has been made in the current five-year period.
I would like to note that as of October 1st, stocks of finished products amounted to 51.9 percent of the average monthly production volume. This is the lowest level for the indicated date since 2009, which testifies to real sales for ‘real money’.
The prevalence of healthy trends in the economy is clearly illustrated by the positive dynamics in transport. In nine months, the gross added value of the industry grew by 2.9 percent due to the recovery of passenger traffic, with a slight slowdown in freight traffic due to the subsidence of pipeline transport. The leaders in the transportation of goods and passengers are railway, air and water transport.
Undoubtedly, the effectiveness of the Government’s measures was the fixation of the service sector in the green zone despite the pandemic. Over nine months it has added 2.9 percent. Information and communication, temporary accommodation and catering services, healthcare, education, creativity, sports, entertainment and recreation, and others have also seen positive growth. These rates make it possible to provide 1.2 percent of contribution to GDP growth.
— It’s no secret that a reflection of the competitiveness of the economy is the demand for our products in foreign markets. What about exports?
— In January-September 2021, 64.7 percent of industrial production was exported — 5.9 percent up on last year. The increase in exports by 36.3 percent was due not only to the rise in prices (by 19.9 percent), but they received a noticeable increase due to the increase in physical volumes (up 13.5 percent). We are growing not only in energy products and raw materials, but also in complex technical products: trucks, tractors and truck tractors, motor cars, machines for harvesting crops, X-ray equipment and others.
At the same time, the traditionally positive contribution of services to exports remains. In January-September, these rose by 19.5 percent, mainly due to ICT, transport services, repair and maintenance services, financial and other business services.
As a result, the foreign trade surplus is the best since 2012 standing at $2.7bn — 1.7 times more than in January-September 2020.
Ultimately, however, the marker of economic efficiency is the financial condition of organisations.
Financial results for January-September 2021 are characterised by a significant increase in gross indicators. At the same time, on the whole, their dynamics are positive. Revenue increased by 23.8 percent, profit from sales — by 28.6 percent, net profit — by 3.5 times. The total damage to unprofitable organisations decreased 5.2 times, and their number fell by 8.7 percent. The return on sales is 0.3 percent higher than last year amounting to 8.2 percent.
Reliable foundation
— What are the reserves for further dynamic development of the economy?
— The key development reserve in the short term is to stimulate domestic demand and increase consumption.
In January-September, the economy grew by 2.7 percent, while the real incomes of the population over eight months — by 2.9 percent. Thus, the state fully fulfils its social obligations. This means that it lays a solid foundation for increasing the contribution of domestic demand to future economic growth.
We are now witnessing a phase of increased demand in the global economy, so during this period it is logical to increase production and sales. However, this requires resources. After all, the price for products directly depends on the cost of raw materials, metals, and energy carriers. Therefore, today the economy that uses the instruments of flexible monetary policy, primarily for its producers and consumers, has more chances to ‘skim the cream’ from the growing world markets.
But for these plans to come true, an appropriate model of behaviour of economic agents, primarily the population, is needed. Therefore, it is extremely vital to stimulate consumer demand.
There is also potential in industries that have not yet left the red zone: construction and agriculture. Because of them, the economy received less than 1.2 percent, that is, if they worked at the level of last year, the economy would have grown by 3.9 percent. It is important, however, that people do not feel the negative impact of this dynamic. Firstly, housing construction should not stop. For nine months, more than three million square metres were commissioned, including 950,000sq.m — with state support. Secondly, the food security of the country is ensured. We increased the production of milk, eggs, flower products and raised more cattle.
In addition, we expanded export supplies and, accordingly, revenue. In January-September, the export of food products and agricultural raw materials increased by 12.6 percent to reach $4.7bn. We expect about $6.1bn as an end-of-year result.
The remaining monitored reserves include the launch at full capacity of production facilities created within the framework of investment projects, whose products are competitive in the domestic and foreign markets.
Photo by Sergey Mitsevich
— Based on the above-mentioned, what can we say to those who predict the economy will fall?
— It can be stated that the main achievement of the nine months of 2021 is stable, outstripping forecast GDP growth (102.7 percent against the planned 101.1 percent) in the context of a double blow: COVID restrictions and sanctions pressure.
As part of the fulfilment of the Head of State’s instructions, a number of industries retained the level of the first half of the year, and even grew in certain commodity items: tractors, TVs, trucks, paper and cardboard, etc. Other undoubted achievements include a positive balance of foreign trade, a minimum level of stocks, a decrease in overdue receivables, a reduction in the enterprises’ debt burden, an increase in net profit and a decrease in the number of unprofitable organisations.
We know our capabilities and do everything necessary to apply them for further development and for the benefit of our citizens.
Interviewed by Vladislav Sychevich
