Leanid Zaika: Currency to flow from Belarus to Russia

The Russian ruble devaluation will affect Belarusian economy.

Leanid Zaika, the head of the Strategy analytical centre, said it in an interview with udf.by.

“The commodity weight to GDP ratio is about 1:6 in Belarus. We can count on 6-7% of the Russian market at best. If we look at the common market of the Customs Union, its prices and volumes 90-93% depend on Russia,” the economist says.

According to the National Statistics Committee, the rate of most imported goods counted by the official statistics increased in 2013 in the Belarusian market. The rate of domestic products in retail trade fell from 73.9% to 71% (food products from 84.1% to 83.3%; nonfoods from 60.3% to 55.1%). It means that imported goods gain the Belarusian market.

Leanid Zaika notes: “We see that cheaper meat, pasta and other food products appear at the Belarusian market. A flow of cheaper cars goes to Belarus – it's more profitable to buy both new and used cars in Russia.”

The economist explains what it means.

“In simple terms, foreign currency will go to Russia. The Russian ruble devaluation will seriously affect the Belarusian economy. We have two ways out: either defend ourselves and compete with Russians or impose the single currency,” he thinks.

We remind that while the Belarusian government spends the country's forex reserves trying to curb the devaluation of the national currency, Russia avoids currency interventions. As a result, the Russian ruble is falling. The ruble fell only 7.12% against the dollar in 2013, but the decline for 27 days of 2014 was 4.8%. The ruble fell 96 kopeks against the dollar and 160 kopeks against the euro from January 20 to January 24.

The 2014 state budget of Belarus provides for increasing the export by 12.2% in comparison with what the authorities forecast for the current year. The Finance Ministry doesn't hide that the draft budget is “optimistic about the restoration of the potash fertilisers market, export revenues and generating income from imports within the Customs Union”.