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World Bank Condemns Lukonomy

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World Bank Condemns Lukonomy

According to the updated macroeconomic forecast of the World Bank, the GDP of Belarus can shrink 3% in 2016.

The presentation of the economic forecast took place in Minsk, BelaPAN writes.

In autumn 2015 the World Bank predicted that the GDP of Belarus would fall by 0.5%. Deterioration of the macroeconomic forecast is explained by the bank by the low level of oil prices, obscure prospects for the Russian economy growth, which consumes the bulk of the goods exported by Belarus.

“Influence of external factors on the Belarusian economy is to continue, in consequence of which the real GDP fall is predicted at 3% in 2016, and at 1% in 2017. It is expected that the average world level of oil prices could be equal to $41 per barrel in 2016 and $50 per barrel in 2017, and the revival of the Russian economy is to be slow,” – the World Bank’s macroeconomic forecast informs.

According to economists of the bank, the progress in the structural reform area could improve prospects of Belarus in the middle term period, however “an immediate recovery is unlikely due to poor diversification of production and markets for the goods, especially in case of state-owned enterprises.”

According to the experts of the World Bank, the economic growth in the country could be promoted by reforms, Restructuring of the state-run enterprises sector, they believe, “is highly important for reducing the interference of the state which causes distortions, and for increasing effectiveness of enterprises’ work.”

“State-run enterprises should transit from quantity targets and indices of employment which are dictated to them, to performance figures and profitability indices, which should be accompanied by increase in their management’s independence due to forming proper mechanisms of corporate governance,” – the review of the World Bank reads.

At the same time experts do not exclude that in case of absence of reforms in Belarus a deeper economic downfall is possible as compared to the predicted.

“Considerable risks are left. A sharper economic slowdown at external markets could cause deeper downfall, especially considering the fact that more than one third of the overall exports fall to the share of mineral resources and fertilizers,” – economists of the World Bank state.

In April the International Monetary Fund also downgraded predicted economic indices of Belarus. According to the fund, the GDP of Belarus could shrink 2.7% (earlier the fund expected the economic downfall of 2.2%).

Meanwhile the official forecast of the Belarusian authorities for this year had not been corrected yet, and it expects the GDP to grow by 0.3%. In the first quarter the GDP fell by 3.6% as compared to the analogous period of the last year.

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