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Bahdankevich: Rainbows And Butterflies Of Preferential Energy Prices Is Over

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Bahdankevich: Rainbows And Butterflies Of Preferential Energy Prices Is Over

Experts predict the freezing of personal income growth in the next five years.

20 years ago, on July 11, 1996, the Supreme Council of Belarus decided to develop the first five-year program of socio-economic development in order to “improve the living standards of all population groups.” According to the official statistics, in the last 20 years, the highest rate of wage growth was observed in 2001-2005 and in 2006-2010: the real incomes of population increased by 80.1% and 76.3%, respectively during this period. During 2011-2015, real incomes in Belarus increased by 32.8%.

“The level of problems in the banking sector and in the sector of state-owned enterprises is high today. Therefore, it will be a good result if we are able to achieve economic recovery in the second half of the five-year period. In these circumstances one can’t expect that income growth will be the same as in the past five years,” – Director of the IPM Research Center Aliaksandr Chubryk noted in his comments to BelaPAN.

According to the experts, high rates of personal income growth in the 2000s were caused by extremely favorable conditions in which the Belarusian economy existed then.

“Economic growth in the 2000s was achieved due to energy subsidies received from Russia, and increase of sales of Belarusian products on the Russian market. In those days we fixed capital investments were growing steadily, enterprises were expanding capacities for production of the products which we were selling mainly to Russia,” – recalls the lead researcher of the Belarusian Economic Research and Educational centre BEROC Katsiaryna Barnukova.

Analysts emphasize that the economic situation today is fundamentally different. As former chairman of the National Bank Stanislau Bahdanovich noted, the “dolce far niente” of preferential energy prices is over now. “Today the world energy prices have dropped and the lag between those prices, at which Belarus buys energy resources, and their value in the world market has reduced,” – Bahdanovich says.

Besides, he adds, the state of the Russian economy does not allow to expect, as previously, the significant growth of the Belarusian export. In these circumstances Belarus can only expect a slow economic recovery and modest wage growth in the current five-year plan, the ex-head of the National Bank considers. “Plans to increase salaries in the current five-year plan have become more realistic. Perhaps we have reached the bottom, and a slow economic recovery might begin in a couple of years,” – Bahdankevich suggests.

We remind that the socio-economic development program for the years 2016-2020, adopted by the Belarusian National Assembly in June, assumes that the growth of real incomes will reach 9,5-11,6%.

“This is an adequate assessment of revenue growth in the medium term. At the same time, given that the economy is unlikely to grow in 2016-2017, the income growth of 9.5% -11.6% can only be expected in the second half of the five-year period,” – Aliaksandr Chubryk predicts.

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