Leanid Zlotnikau: What Is Built In Belarus Is Not Economy

The economist spoke about the paradoxes of the Belarusian management system.

The World Bank predicts a slowdown in the economy of Belarus in 2019 to 1.8% of 3% in 2018, according to an updated country economic review published on Wednesday, zautra.by writes.

WB experts have significantly worsened the assessment of the growth of the Belarusian economy in 2020-2021. According to their forecast, the GDP of Belarus in 2020 will grow by 1.3% (previously it was expected to grow by 2.4%), in 2021 - by 1.2% (2.1%).

Why are the forecasts for the Belarusian economy worsening and is it worth trusting them?

As candidate of economic sciences Leanid Zlotnikau notes, a lot depends on the forecasting methods that are used. For example, when the global crisis began in 2008–2009, the International Monetary Fund, despite the opinion of some scientists, could not foresee it. The prediction model was chosen unsuccessfully.

Almost no one can accurately predict what is happening, because of the complexity of the processes, the economist believes.

- The models do not work at turning points, and in the last one and a half years, the development trends change very much, so predictions are often intuitive. It can be noted that the IMF and the World Bank each quarter correct market forecasts. The forecasts of the Belarusian government, which cannot take into account all the circumstances affecting the development of the economy, do not work either, ” explains Leanid Zlotnikau.

At the macro level, he adds, it is possible to predict the development of the economy several years ahead, but it is much more difficult to do this for a couple of months or a year. Experience shows that fluctuations in forecasts can be significant.

According to official information, products worth 1 billion rubles have accumulated only in the warehouses of metropolitan enterprises. Leanid Zlotnikau said that, compared to last year, in the four months of this, stocks in warehouses grew by 6%. These are mainly products of the engineering industry. According to the economist, sales of Belarusian agricultural products to Russia, which occupy a significant share of domestic exports, are deteriorating.

This characterizes the general very alarming situation in the economy. The financial condition of enterprises is deteriorating. They are required to produce more products and increase exports. They produce more products, and then they put them in a warehouse, and after that, everyone reports that the economy is growing.

- Our economy is not a market economy, and in general is not an economy, since the fact that they have produced more products, and this production is unprofitable, will not become a better country. Production growth is not economic growth at all. What’s the point, if we sell part of agricultural products at a loss, for example, beef or butter. The more such products are produced and exported, the poorer the country is, the economist states.

He argues that in order to really be able to measure economic growth, prices must be free. And in Belarus they are controlled.

- The GDP is calculated only with regard to market prices, and our prices are pressed to the cost. This is not related to the market price. At the same cost, prices for different reasons can fluctuate, and sometimes it turns out that the GDP does not go to the country. The price is influenced by about a hundred external factors. The price should not be set even inside Belarus. And we have import substitution, which does more harm than good, as it happens in the case of MTZ. But now there is a demand for high-capacity tractors, and the director is demanded to use Belarusian-made engines, although our engine plant practically does not produce high-powered engines, the expert draws attention.

Domestic prices, economic policy, prices in the world market - this is all interconnected, the source stresses.

- We must understand that the procedure of the price setting is very complicated, like the temperature in the body. And if you begin to treat, without knowing what you are treating, you can die. And the Belarusian economy is governed in this way, concludes Leanid Zlotnikau.