Belarus Multiply Cuts Trade With Ukraine

The delivery balance with the southern neighbour was the best among the main trade partners.

This is evidenced by the latest data on exports and imports of goods. The trade balance of Belarus and the European Union has not decreased so much, writes banki24.by.

In Belarus, statisticians publish operational information on commodity trade in the framework of countries and macroregions. In May, the figures for the first month of spring became available.

Russia and Belarus are territorial members of the Commonwealth of Independent States (CIS) region. According to Belstat, the volume of trade in goods of the group "CIS minus Russia" in March 2022 decreased almost 5 times to the level of March 2021. In dollars, the volume of trade in goods carried out in dollars in the CIS region minus the Russian Federation for March amounted to 160.6 million USD (total 21.8% of 2021).

Also significant decrease occurred in February and January of the current year. In January, the volume of foreign trade in the region amounted to USD 853.1 million, in February – USD 746.4 million. In this case, a multiple decrease in mutual deliveries is also clearly visible.

The multiple decrease of the volume of foreign trade cannot be explained by the weakening of BYN-ruble against the dollar and the euro. Firstly, the Belarusian ruble did not multiply devalue against USD and EUR. Secondly, since the second half of March, the reverse movement of the exchange rate began - towards the strengthening of BYN against USD and EUR.

SOUTHERN VECTOR IS DRYING

A valid explanation can be found if we remember which country until recently was in the top 3 trading partners of Belarus and at the same time was taken into account by Belstat as a territory within the CIS.

According to the results of two months of 2022, the share of Ukraine in the commodity trade of Belarus was 9.6%. The delivery balance with the southern neighbour was the best among the main trade partners: USD 761.9 million in favour of Belarus.

The share of Ukraine in Belarusian exports in January-February was 15.7%, in imports – 3.5%. During this period, the coverage ratio of imports by exports in Ukraine reached 437.4% (USD 437.4 of exports for every USD 100 of imports). Oil products from Russian oil were the main goods of the Republic of Belarus on the Ukrainian market.

In January-February 2022, the share of trade with Ukraine in the "CIS minus Russia" region amounted to about 75.9%, 81.8% for exports and 57.7% for imports.

On February 24, Putin announced the start of the special military operation in Ukraine. As a result, Belarus was forced to redirect the trade flows from the Ukrainian vector to other countries.

According to Prime Minister Raman Halouchanka, in early spring, the government had plans to replace about USD 3.6 billion of Belarusian exports to Ukraine by USD 1.9 billion in favour of the Russian vector and USD 1.7 billion in favour of the Chinese market.

Foreign trade data show that the withdrawal from the Ukrainian market was fast. For March 2022, the trade volume in the "CIS minus the EAEU" region amounted to only USD 77 million, including exports: USD 61 million and USD 16 million for imports. Gross indicators for this region until recently were provided by Ukraine.

Back in February, commodity flows across the group of countries "CIS minus the EAEU" were much more impressive. For the third month of winter, the volume was about USD 659 million: exports – USD 471 million, imports – USD 188 million. In other words, the turnover in March and February dropped by nearly an order of magnitude, and imports collapsed by more than 10 times.

Active hostilities in Ukraine continued in April. For this reason, former trade with the southern neighbour is unlikely to recover as quickly as it decreased.

EUROPEAN TRADE VOLUME IS STILL SIGNIFICANT

But the trade of Belarus and the European Union does not show such dramatic changes as it is with Ukraine. For March 2022, goods flows to/from the EU amounted to USD 961 million in equivalent: exports – USD 593 million, imports – USD 368 million.

March volume is quite comparable with January and February. In the winter months, trade with the EU amounted to USD 1,066 and USD 1,091 billion respectively. The weakening of the Belarusian ruble against the dollar and the euro can be taken as the reason for a slight decline.

Another thing is that in March-April the European Union imposed packages of sanctions against Belarus. For example, in March the EU announced sanctions on goods used to make tobacco products, mineral fuels, bitumen, gaseous hydrocarbon products, potassium chloride, wood products, cement, iron, steel and rubber products.

In April, the EU Council banned road transport companies established in Belarus from transporting goods across the EU, including in transit. Exceptions to the sanctions regime concerned some of the goods listed in the EU.

On April 16, Belarus introduced a ban on the movement of vehicles (cars and trucks) registered in the European Union across the customs border of the Eurasian Economic Union into the Republic of Belarus as a response. The only exception was for EU transport crossing certain checkpoints in specially designated places for cargo operations and transfers.

Negative consequences do not appear immediately due to temporary exemptions of the sanctions regimes, as well as due to accumulated supplies. It is more likely that the trade decrease with the EU may intensify closer to the end of the 2nd quarter or in the 3rd quarter.