Belarusian economy may collapsed after crisis in Russia

Peak of the financial crisis in Russia will fall on March-April 2009 and will last for two years, the World Bank forecasts. There is no such report on prospects of the Belarusian economy. However, the crisis in Russia will backfire our country.

It is necessary to say that 48.3 per cent of trade volume of Belarus falls on the eastern neighbour. Some sectors of Belarusian industry depend on Russian market 80 per cent. What can Belarusian industry expect in this situation?

Some markets have already felt problems of the Russian economy, “Belorusskaya Delovaya Gazeta” (BDG)notes. It was clear in early autumn that Belarusian banks, many of them subsidiaries of Russian and Ukrainian banks, faced liquidity shortage, among others due to decrease in financing from parent bodies.

After banking market, metallurgical and automobile markets crippled. Russian automobile industry faced difficulties in early autumn. Since October 4, KAMAZ announced shortening of working week and reducing of producing programme by 11 per cent for 2008, and the main conveyor line was stopped yesterday due to the lack of orders. Rumours about planning 10-20 per cent reduction at the automobile giant have leaked to media. GAZ group has faced the same problems. It has had to adopt a decision on reducing production programmes and setting a short week.

Belarusian automobile manufacturers have faced problems following Russian automobile sector. The saddest news is coming from Minsk Automobile Plant (MAZ). Russia is the main sales market for the plant: rates of supplies of heave trucks and passenger vehicles to Russia are 60 and 40 per cent respectively. BDG has already written that a decision on strategic alliance with Russian manufacturers made MAZ to seek tighter cooperation with Russian market. The plant was increasing manufacture in the first half of the year: MAZ increased market output by 18.7 per cent in comparable prices YoY in January-June.

Now, when Russian market has faced sales problems, the enterprise has accumulated residual stock. Experts say the Minsk Automobile Plant is unable to dispose its normal volume of output. BelAZ plant feels difficulties with products sale, too.

Crisis in the automobile sector provoked crisis in metallurgic market. Automobile manufacturers decreased demand for resources, many of them have problems with business solvency. Even Belarusian metallurgic Plant has met problems with selling automobile cord though it was very profitable selling item.

According to Anatol Akantsinau, director of the Center for Strategic Research “Market Systems”, chairman of joint company “Gildiya Marketologov”, next sectors to face financial crisis will be building (possessing much virtual money) and other industrial markets.

In the meantime, it is industrial sector that is most dependent on Russian market. The Ministry of Economy plans to supply to Russian in 2009 23 per cent of synthetic resin and plastics, 39.5 per cent of polyethylene, 47 per cent of chemical fibre, 44.6 per cent of tyres, 24.7 per cent of ferrous materials, 72.3 per cent of metal-cutting equipment, 60.8 per cent of heavy trucks, 36 per cent of tractors, 73.4 per cent of buses, 48.9 per cent of harvesters and fodder choppers, 42.5 per cent of wood-fiber slabs, 28.7 per cent of paper and 22.3 per cent of cardboard produced in the republic, as well as 84 per cent of exported cement an d80 per cent of asbestos-cement boards, 59 per cent of glass.

In this situation Belarusian companies should review their strategies of development, A. Akantsinau thinks. For instance, industrial enterprises should review their ranges and reorient to more stable purchasers and markets. However, it is not so easy to diversify markets now. “Nobody waits for us abroad, they have own competitive market,” A. Akantsinau said at “Development of Foreign Economic Ties” conference held in Minsk.