Russian "Sberbank": Lukashenka Once Again Starts "Printing Press"

A quick deterioration of the situation in the Belarusian economy is predicted.

Sberbank is skeptical about the Belarusian government's forecast of zero economic growth in 2020, and predicts a worsening situation in the country's economy, thinktanks.by writes.

Analysts at the Center for Macroeconomic Research of the Russian Sberbank call the forecast of zero growth in the Belarusian economy, which the government had previously hoped for, "an extremely unlikely scenario." In January-August, the economy of Belarus fell by 1.3%. Most likely, the recession will only intensify by the end of the year.

On the positive side, the report notes a successful harvest campaign and modest growth in retail sales. However, this can be called a kind of spoonful of honey in a barrel of ointment. The same growth in trade is associated with the desire of the population to get rid of ruble savings as soon as possible due to the expectation of a devaluation of the national currency. In addition, against the backdrop of a decline in production, official statistics report an increase in real incomes of the population. Simply put, Lukashenka has once again started the "printing press", which means that a further fall of the ruble, and an increase in inflation are inevitable.

"Despite the passage of the peak of the political crisis and the partial suspension of lending, August showed relatively good economic results. The fall in GDP for 8 months amounted to 1.3% versus 1.6% a month earlier. According to our calculations, this is equivalent to an economic growth of 0 in August, 8% after a 1% contraction in July. Additional support was provided by the agriculture sector compared to the previous month, its positive contribution to growth increased from 0.1 percentage points to 0.4, and the growth in gross value added of the sector in January-August amounted to 8.1%. The statistics clearly illustrated the preliminary results of the harvesting campaign - favorable weather conditions contributed to the good harvest, " the report says.

The industry, on the contrary, according to experts, has moved to cut production volumes. In August, the decline was 0.1%, after rising 1.1% in July.

"The results continue to be under pressure from interruptions in oil supplies, which have led to a contraction of oil refining by 10.2% per year. Problems with the export of potash fertilizers affected the production of chemical products, which decreased by 6.3% in August, and the transport industry: the freight turnover of railway transport in August is 8% lower, and the total freight turnover - by 2.3%," the report says.

Experts note that despite tough economic conditions, real wages continue to rise rapidly. In August, the growth was 7.6%, while real disposable income of the population increased by 5.4% in January-July.

"We associate such dynamics with state-owned enterprises, through which a familiar instrument to support consumer demand is being implemented. The latter translates into an increase in retail turnover, which amounted to 2.7% in January-August."

Sberbank experts remind that the policy of stimulating income in the past has already led to significant problems. The accumulation of additional imbalances still creates significant risks for the Belarusian ruble exchange rate and inflation. The effect of stopping lending has not yet had time to fully affect the rate of the GDP growth, but experts expect a deterioration in the state of economic activity in the coming months.

"The forecast of zero growth for the year, announced by the Minister of Economy, is becoming an extremely unlikely scenario for the development of events," the report says.