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21.07.2014

Barys Zhaliba: Belarus will bear burden of problems created by Putin 4

17:08, — Economics

Barys Zhaliba: Belarus will bear burden of problems created by Putin

The key indicators of Belarus's economy will be worsening.

Economist Prof. Barys Zhaliba said it in an interview with charter97.org.

Belarus's GDP rose 1.2% in the first half of 2014 in comparison with the January-June period in 2013. Will the authorities manage to reach 3.3% they planned?

The current economic situation in Belarus gives me more and more grounds to doubt it. Our economy doesn't have driving forces, as a saying goes. Look, 1.2% is the year's figure. We compare GDP growth during six months of the current year with the last year. We need GDP to reach 3.3% every month, but even in this case we cannot achieve even the half of the target.

What factors did influence such a tiny growth?

Russia is deep in a war with Ukraine. It spends huge money on it as well as on Crimea. In addition, it has faced international isolation, and the US have begun to impose sanctions on Russia's leading companies. I think that at the end of the year, Russian market won't buy as many Belarusians goods as before. We are on the brink of a trade war with our second trade partner, Ukraine. It happened because the Belarusian authorities introduced licences on Ukrainian beer and confections. GDP won't reach 3.3%. We will be lucky if it doesn't drop lower than 1.2%.

What should ordinary Belarusians expect?

The gradual devaluation of the Belarusian ruble will continue. Perhaps, it will even speed up. The inflation rate will be higher than 16-17% forecast by the National Bank, so nominal salary growth for teachers and healthcare personnel won't even compensate the inflation rate. So, I don't see any opportunities for living standards to increase.

What concerns the latest US sanctions against the Kremlin, many independent experts agree that they will to some extent hit Belarusian subsidiaries of the Russian banks and companies subject to the sanctions. However, Belgazprombank, for example, said the sanctions would not hit it. Is this true?

I think they will affect them anyway, either directly or indirectly. Belgazprombank is a subsidiary of Gazprombank. The controlling stake belongs to the Russians. Belgazprombank actively cooperates with the European Bank for Reconstruction and Development, which can restrict issuing loans. It won't be an immediate effect, but it will be. Let's see in six or twelve months what Belgazprombank will say. They do not feel sanctions today, but the restrictions may lead to deficit of credit resources for Belgazprombank as well as for Belvnesheconombank. Belarus will bear the burden of problems created by Russia.

Photo by RFE/RL


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