The authorities are optimistic
The government expects GDP to grow by 2% by the end of 2017 with a forecast of 1.7%, and by the end of 2018 — by 3.5%, Prime Minister of Belarus Andrei Kobyakov said at a meeting of the Council of Ministers on 5 December. As for inflation, the Ministry of economy and the national Bank of Belarus expect that it will not exceed 7% by the end of 2017. Initially, the forecast of the Belarusian authorities for 2017 provided for GDP growth at 1.7% with inflation not exceeding 9%.
The world Bank predicts that Belarus ' GDP will increase by 1.8% in 2017, inflation will be 9%, the current account deficit — minus 3.2% of GDP.
A moderate recovery of the Belarusian economy in 2017 provided by several factors, experts say EOS. Namely, the situation in foreign markets has improved, economic growth in Russia has strengthened, commodity prices have risen, which stimulated the growth of Belarusian exports and supported business activity within the country. Important condition: tight monetary policy and fiscal policy, which the Belarusian government and the national Bank have been conducting since 2015.
In 2018, the world Bank expects Belarus ' GDP to grow by 2.1%, inflation – within 7.2%. The forecast deficit of the current account – a minus of 3.6%.
According to the Bank's estimates, in 2018, the more favorable foreign economic situation will remain, and this will support the growth rate of 2% of GDP. Income growth, in turn, stabilizes the level of poverty (if we consider the level of poverty as spending $ 5.5 per day, measured by purchasing power parity). The situation in the labor market will be difficult because of the difficult financial condition of state-owned enterprises.
WB experts do not expect high rates of economic growth in Belarus due to structural deficiencies of the economy. Prices for imported energy resources will not be as favorable for Belarus as before. This means that Belarus will be less able to rely on Russia and on high prices for raw materials exports. Therefore, if the country stops developing, it will fall into a trap of slow growth.
Among the potential factors for the growth of the Belarusian economy, experts of the world Bank call the improvement of the business environment for the development of private entrepreneurship and solving the problem of inefficient state-owned enterprises. If the combination of these measures works, Belarus may achieve higher growth rates in the medium term.
Risks: debt, dependency on raw materials and artificial stimulation of growth
In 2018, Belarus should pay out $ 3.1 billion of foreign debt. To do this, Belarus needs long-term financing. The previous agreements between Belarus and Russia on refinancing Belarusian debts on Russian loans and the issue of Eurobonds will only temporarily reduce the pressure on the balance of payments, but in the medium term we need sources of a more sustainable solution to the problem of external financing, the WB experts are convinced.
The second group of risks is related to the fact that Belarus still depends on oil supplies from Russia and fluctuations in world commodity prices.
Previously, a serious increase in the GDP of Belarus provided an oil subsidy. In particular, in 2007 it reached 8%, ahead of all countries in the region, including Russia as a whole in some years, oil subsidy has reached 15% of the Belarusian GDP. The sharp drop in oil has reduced these benefits. In 2016, the oil subsidy amounted to about 4.6% of Belarus ' GDP — 9 percentage points lower compared to the previous year, which had negative consequences for the rate of economic growth, experts say.
Another serious risk that, according to experts of the world Bank, may threaten macroeconomic stability in Belarus is artificial stimulation of GDP growth and administrative growth of wages.
IMF: negotiations on a new program frozen
The IMF raised the forecast of Belarus ' GDP dynamics in 2017 to 0.7% (from minus 0.8% in the April survey). At the same time, experts of the Fund expect that inflation in Belarus at the end of 2017 will be at the level of 8%, not 9.3%. The forecast of the current account deficit in Belarus in 2017 worsened to minus 5.3% of GDP (the previous forecast – minus 4.7% of GDP).
According to experts of the Fund, the main stimulus for the growth of the Belarusian economy was the improvement of dynamics in the region and in Russia in particular. At the same time, they particularly note the positive impact of the oil and gas agreements signed in April 2017 with Russia.
In 2018, the IMF forecasts GDP growth in Belarus by 0.7% , inflation – at 7.5%, the current account deficit of Belarus — minus 4.6% of GDP.
Recall that in 2015-2016 Belarus negotiated with the IMF on a new program of cooperation, involving a loan of about $ 3 billion at 2.28% per annum for 10 years, with the conditions that Belarus in a short time will carry out reforms in the payment of housing and communal services and the public sector. The Belarusian authorities did not dare to reform. They have found alternative sources of external borrowing, albeit more expensive. In June 2017, Belarus placed 7 and 10-year Eurobond issues totaling 1.4 billion dollars, received 3 tranches of the Eurasian loan in the amount of 800 million dollars. And in August attracted a 10-year loan from the Russian government in the amount of $ 700 million.
Negotiations on the new programme with the IMF have stalled. In November 2017, the IMF completed another mission to Belarus. The consultations were mainly of a technical nature.
Experts: growth rested on the ceiling, depreciation of the Belarusian ruble is predetermined
Director of the Research center IPM Alexander Chubrik at the conference "Economic environment for business development" December 20 noted that in 2017 began the restoration of the Belarusian economy, which contributed to the cyclical component, the growth of domestic demand and exports. According to him, Belarus ' GDP will grow by 2.3% in 2017 and by 2.5% in 2018.
The expert stressed that in 2017 the growth of non-oil exports of Belarus was facilitated not only by the recovery of the Russian economy, but also by the weakening of the real effective exchange rate of the Belarusian ruble. "The ruble is gradually depreciating, and the competitiveness of Belarusian goods does not seem to deteriorate – of course, this primarily concerns the Russian market," he said.
The expert predicts that the role of non-oil exports of Belarus will decrease. By the end of 2018, the growth of oil exports will be about 40%, which is a significant contribution to GDP.
The growth of real GDP in Belarus will begin to slow down in the first quarter of 2018, A. Chubrik believes. According to his estimates, in 2018 the growth of the money supply in Belarus will slow down, and there will be some weakening of the Belarusian ruble after the Russian ruble. The exchange rate in the fourth quarter of 2018 will be 2.07-2.08 ruble against the dollar. Tight monetary policy will remain. Inflation is expected to accelerate slightly by the end of 2018, which will lead to a revival of the consumer market and a possible increase in utility tariffs.
Senior researcher at BEROC Dmitry Kruk believes that the growth of the national economy in 2017 should hardly be considered a recovery of growth – rather, it is a way out of a long recession and a return to the period of stagnation, the end of which is not yet visible.
"The key problem is that our entire growth was based on the accumulation of fixed assets. We accumulate capital and continue to do what we can in large volumes. But this model is exhausted. We have an acute shortage of productivity, " the expert stated.
For this reason, the possible growth of the national economy is 2.5% to 3.5%. "The growth can fall to minus 5% if the impact of the burden of the accumulated debt or any other problems," — said Dmitry Kruk.
According to him, Belarus is lagging behind the countries of the region in the coming years, with the exception of Ukraine. "The economy does not cope with its mission — to increase revenues and ensure the growth of welfare," D. crook said.
As a result, low productivity within the Belarusian economy entails depreciation of the national currency. Productivity is important for competitiveness. "If technological advantages do not allow to provide advantage, price factors come into play. There is a steady trend towards the depreciation of our currency. It is predetermined by the fact that we do not have enough performance," Kruk said.
If there is not enough performance, then obviously we need to continue to devalue the real exchange rate. The average annual rate over the past 15 years was about 3 PP per year. "My conservative estimate is that the trend will continue and the depreciation will be slightly slower. Impairment of approximately 2% per year may be sufficient to compensate for losses in productivity," the expert believes.
According to his calculations, taking into account the expected inflation of 6% per annum, depreciation of the real exchange rate of 2% and inflation in neighboring countries of 2%, to maintain the competitiveness of the Belarusian economy will need a devaluation proportional to inflation — that is, about 2%.
"What is it? We will continue to depreciate. This means that in dollars, the nominal values will be the barrier that we are facing. We have a very small real growth-2%, and it eats up, albeit small, but devaluation. Such a growth regime leads to a lack of competitiveness and the preservation of real growth. Such a growth scenario is not acceptable," said Dmitry Kruk.
As Belarus will repay the debt in 2018
Foreign currency payments of Belarus on public debt in 2018 are estimated to total more than 3.7 billion dollars: 2.5 billion dollars is needed to repay the principal debt, more than 1.2 billion dollars — for its service.
Source of information
http://www.belrynok.by/2017/12/29/belorusskaya-ekonomika-2018-prognozy-pravitelstva-i-ekspertov/