Belarus recovery underway in January-June

Belarus recovery underway in January-June
Belarusians shopping in a supermarket in Minsk
By bne IntelliNews July 20, 2017

Belarus is the laggard of the Commonwealth of Independent States (CIS) as the rest of the region emerges from recession, but the economy is starting to pick up a little steam with the end of the first half of the year.

The gross domestic product of Belarus totalled BYR47.3bn ($24.2bn) in January-June 2017, or up 1% as against January-June 2016 in comparable prices, according to initial estimates of the National Statistics Committee of Belarus. In January-June 2017, the deflator index of Belarus GDP totalled 107% as against the same period of last year, BelTA reports.

Most commentators expect the recession to continue in the full year for 2017, with an estimated 0.9% year-end contraction, according to Berlin Economics. After GDP fell 3.9% in 2015 and is expected to fall by 2% in 2016 or more, there will be only a mild recovery in 2017 when the International Monetary Fund (IMF) forecasts that output will grow by 0.6%. The World Bank is more pessimistic, saying the country will return to 1.1% growth, but only in 2018. The conservative economic forecast for 2018 assumes GDP growth at 1.1%.

Industrial production is also picking up pace. In January-June 2017, industrial output in current prices totalled BYR43.3bn, up 6.1% in comparable prices against the same period of last year, the statistics committee said.

The industrial output of the Belarusian mining industry rose by 2.5%, while the processing industry reported a 6.6% increase. The supply of electricity, natural gas, steam, hot water, and conditioned air grew by 5.5%. The industrial output growth rate in water supply, collection, processing, and treatment of waste, and efforts to liquidate pollution totalled 98.4%.



In June 2017, Belarus’ industrial output was up 6.6% as against June 2016 and 0.6% as against May 2017. The volume of industrial output in 11 out of 13 branches of the processing industry exceeded the figure registered in the first half of this year.

The highest growth was registered in the production of machines and equipment not elsewhere classified (21.2% up), manufacturing of wooden products and paper, printing, and copying of recorded media (17.2% up), manufacturing of chemical products (16.8% up), metallurgical products, ready-made metal goods except for machines and equipment (10.3% up), production of textile goods, apparel, goods made of leather and fur (10% up), production of electric equipment (9.6% up), reports BeITA.

The financial stability of the country has also improved greatly after the government issued $1.4bn in Eurobonds in July. Moscow has also said it will provide an intergovernmental loan worth $700mn to Minsk, Russian Deputy Finance Minister Sergei Storchak told TASS in the middle of July. And Belarus has already had $300mn, the final disbursements from a $2bn programme with the Eurasian Fund for Social Development (EFSD).

The large bond issue and financial help from Russia means that Belarus has almost raised enough to cover its debt obligations until the end of 2018, including an $800mn bond that comes due in January, Moody’s Investors Service said in a note.

“Belarus is close to securing sufficient external financing to permit it to refinance or pay its upcoming foreign currency liabilities for the next 18 months,” said Kristin Lindow, a Moody’s senior vice president in a note on June 17. “This includes the $800mn eurobond falling due in January 2018.”

All this  cash has fed through to the gross international reserves (GIR), which stood at $6.5bn as of July 7 and look a lot more healthy than they did this time a year ago.



At the same time, the central bank has more or less reined in inflation, which has been falling steadily all year. The economy ministry has projected a decrease in annual inflation to 5% with a forecast of 9% for 2017.

Consumer prices increased by 3.4% and foodstuffs by 4.3% in the first quarter of this year. When the Belarusian ruble depreciates, which it has done three times in recent years, prices for imported goods increased and restrained growth in household incomes.

Transport is picking up as the number of passengers traversing Minsk’s airport passenger rose by a quarter (27%) year-on-year in the first half of this year, reports Belta. Minsk Airport handled 425,200 passengers in June 2017, an increase of 22.2% y/y. The number of airport users has exceeded 1,079,000 people, up 26.9% since the start of the year compared with last year. And from the start of the year, the airport serviced a total of 11,454 flights (up 9.3%).

In general Belarus’ freight traffic was up 2.3% y/y in the first half of 2017, when  Belarusian organisations shipped 209.4mn tonnes of cargo, up 2.3% from the same period of last year, according to the statistics committee.

Freight turnover climbed by 4.9% from January-June 2016 to total 64.8bn tonne-kilometres. Belarusian carriers transported 984mn passengers, 94.9% as against the same period a year earlier. Passenger traffic amounted to 11.8bn passenger kilometres, 100.7% as against the same period last year. 

Agriculture is doing less well, with the agricultural output down 0.8% in the first half of this year. Belarusian agricultural enterprises of all kinds (state-run agricultural enterprises, private farming enterprises, and personal subsidiary economies) turned out BYR15.3bn worth of agricultural products in January-June 2017, which was 99.2% of the result last year in the same period.

State-run agricultural enterprises produced goods worth BYR5bn, down 0.1% in comparable prices as against the same period of the previous year.

The fodder harvest campaign continues in Belarus, and as of July 1, state-run agricultural enterprises harvested 2.2mn of grass fodder, or 79.5% as against July 1, 2016, onwards.

Agricultural enterprises of all kinds produced 903,800 tonnes of livestock and poultry (in live weight), up 2.5% in the first half of this year. The production of milk made up 3,624,600 tonnes (up 2.2%). State-run agricultural enterprises produced 860,500 tonnes of livestock and poultry (in live weight), an increase of 3% over the same period of last year. Milk production was 3,471,400 tonnes, up 2.9% from January-June 2016. As of July 1, 2017, the cattle population in state-run agricultural enterprises made up 4.3mn head, up by 0.7% as against same period of last year, including 1.4mn cows (up 0.3%). The number of pigs totalled 2.8mn (up 0.3%). 

Belarus is set to start harvesting grain crops and legumes in the last days of July, and the harvest is expected to be affected by the bad weather that afflicted the entire region in May. However, experts in Minsk say Belarus will be less affected than its neighbours.

The harvest has been delayed by the poor weather and by this time last year some 3% of the areas under crops had already been harvested.