OREANDA-NEWS. July 18, 2012. Belarus’ economy may expand by 5-6% in 2013, reckons Anton Dolgovechny, head of the Economy Ministry’s central department for economic analysis.

Assessing the basic indicators of Belarus’ economic development in Jan-May 2012, the analyst admitted that macroeconomic trends in Belarus had been sustained.

Industries are the engine of economic growth in Belarus: they account for 2% of Belarus’ 3% economic growth in January-May 2012, the expert informed. Oil refining accounts for 18% of economic growth in the industrial sector, petrochemical enterprises – 37%. Commerce produced 0.8% of Belarus’ GDP growth, transport and communications – 0.7%, agriculture – 0.2%, the expert informed.

The forecast for next year is positive, with GDP growth expected at 5-6%, Dolgovechny said. However, experts realize that with a growth like that the government will not be bale to reach the 5-year target. For that reason, the government will try to accelerate economic growth, taking care not to upset the balance for fear of trigger a new economic crisis, Dolgovechny said.

One of the hidden resources for economic growth in Belarus is labour productivity, which is lower than in developed economies, he said.

Belarus’ inflation forecast for 2012

In the meantime, Belarus’ Economy Ministry expects inflation growth will not exceed 22% in 2012, Dolgovechny said.

“After five months inflation growth stands at 8.5%, which makes us believe the 20-22% forecast will be fulfilled. Personally, I think it will be around 20%. However, inflation continues to grow by 1.5% per month on average, which has to do with the inertia of inflationary processes. We expect the rate of monthly inflation growth will be sustained at 1.5% till the end of the year,” the analyst said.

At the same time, he does not rule out the chance that inflation may grow at a higher rate because of the pressure to raise utility tariffs for private households.

Belarus’ government fears lest the pressure for raising salaries should trigger inflationary growth, Dolgovechny said.

To ease the pressure on prices and the inland consumer market, the National Bank of Belarus plans to keep interest rates above the rate of inflation in a bid to convert extra incomes into bank deposits. Another factor of restraint is the government’s plan to raise utility tariffs for private households.

Belarus to quit monetary financing by 2014

Furthermore, Belarus plans to completely abandon monetary emission practices by 2014 to meet its liabilities to the EurAsEC Financial Bailout Fund.Starting 2014 monetary emission credits is supposed to reduce to 0% from 1% of the GDP in 2013, the analyst said.

Direct foreign investments

Referring to foreign investments, analyst Dolgovechny mentioned that the bulk of direct foreign investments in Belarus is reinvested incomes.

Of USD 700 million Belarus scooped in direct foreign investments January-April 2012 reinvested incomes account for around 70%, which has little to do with creating new jobs and establishing new enterprises, the analyst said. “We hope to overcome that trends, which may require efforts to change the country’s business climate”, the expert said.