“You’ll Be Glad of Saving Your Dollars Now”

The Belarusian economy is shrinking, and people are getting poorer.

The Belarusian economy is shrinking, and so are wages, although foreign trade looks allegedly good. How it will affect people and whether it is worth saving money in falling dollars and euros, as the Belarusians are used to, tells Vadzim Iosub, senior analyst of the newspaper Belorusy i Rynok.

A year later, you will be happy with the accumulated currency.

- The dollar and euro are falling when more foreign currency is sold than bought," said the analyst.

According to the National Bank, last month, almost everyone - banks, people, businesses, and non-residents - sold more currency than they bought.

- As long as this situation continues, the currency will go down. But no one guarantees this situation will last indefinitely. Now the fall of the currency against the Belarusian ruble is being facilitated by the fact that the dollar and the euro are falling against the Russian ruble. If we are talking about the next few weeks, the decline of both the dollar and the euro may continue.

Maybe it's time to get rid of the dollar and euro before they depreciate even further.

- If you aim to speculate, to try to make a thousand dollars into a thousand and ten dollars, you can try to sell dollars now and try to buy them in a week or two. If you have dollars with a longer term goal in mind, it makes sense to retain those dollars. Nothing will happen to them.

The sanctions cause a decline in Belarusian exports. There will be less foreign currency inflows, and the exchange rate will go up again.

- Once the Belarusian exports begin to decline significantly, it will mean a reduction of the Belarusian ruble. And then you will be glad that you have not sold your thousand dollars. If you have rubles and are willing to buy foreign currency, yes, it makes sense to accumulate it. I think you will be glad of such purchases in a year.

The economy is shrinking: everyone gets poorer

Belarusian companies have foreign currency, which they can sell. However, this is not very good in the current situation. One needs a foreign trade surplus to have hard currency. That is, to sell abroad more than to buy. This is what the authorities and companies were aiming for, but the situation is different now. Exports and imports are falling. However, imports are falling faster, which is why the balance is positive. In March, it was $330 million.

- If we compare March and February, exports of goods and services fell by 16 per cent and imports fell by more than 25 per cent. This is evidence that the economy is slowing down, becoming less sophisticated. It is better for both exports and imports to grow even if the balance is negative.

A drop in exports means the Belarusians are earning less in foreign trade. Falling imports mean some companies simply can't buy the goods they need for production.

- Many have to buy some imported raw materials, components, and so on. Enterprises, when they use up their stocks, will produce less. Someone may not be able to produce at all.

If the downward trend of exports and imports continues, unfortunately, someone may lose a job. Importers and exporters will be first to face it. It may affect everyone later. Unfortunately, under sanctions, this result is inevitable," continues Vadim Iosub.

Changes in foreign trade significantly hit the Belarusian economy, as it is export-oriented. Therefore, no positive things are expected in the near future, despite the fall of the dollar and the euro.

The exchange rate is not an indicator of the economy's success

- We are in a rather alarming situation. What is the paradox here? For many people, the exchange rate is a very important indicator of economy. One has to clearly understand that the exchange rate is not the most important or even one of the most important economic indicators. If you see that the dollar is falling, but the exchange rate stands still, or your salary is falling, if prices are rising, if you are wondering if you might find yourself unemployed in a month, then a falling dollar adds little positive to such a not-so-jolly picture.

In March, the nominal wages of the Belarusians grew by nearly 40 rubles. When the dollar is falling, it means they grew in dollar terms, too. However, adjusted for inflation, real wages dropped by an average of 3.4% compared to February. It means Belarusians can afford fewer goods and services.