National Bank Ex-Head: 17% Inflation. Tendency To Continue

GDP fall in the country is a tendency.

Former head of the National Bank of Belarus Stanislau Bahdankevich is not optimistic when it comes to the Belarusian economy, as Svobodnye Novosti reports:

- I think the GDP fall is a tendency. This is due to the isolation in which Belarus finds itself. We cannot produce and sell potassium in the same volumes as before. We cannot sell oil products which we used to supply in large quantities to Ukraine and the European Union; our imports, including consumer goods, have sharply decreased. The population has turned poorer. If the authorities don't find a solution to the problem, then, in my opinion, the GDP will collapse by 20%. They are trying to find a way out building a port in St. Petersburg and trying to redirect logistics to Asia... But it will cause a drop in quality.

- The EDB, however, predicts a drop in GDP by 6.5%, the IMF - by 10%. What is the reason for their optimistic forecasts?

- Probably, the authorities think they will find a solution to all the problems, find markets and increase production. I assume the vertical power structure is mistaken.

Another thing is that inflation will not be less than 20% per annum. Perhaps, the volume of the fall may be "adjusted" at the expense of high inflation. Given such a huge inflation, one can always adjust the statistics on the gross output a little.

- Doesn't the stability of the Belarusian ruble reflect the state of the economy?

- Today, the ruble stability indicates a regression. It's an indication that production is falling as well as the demand for foreign currency. We do not need to pay for raw materials, supplies, products from the civilized world: Europe, Canada, America, Great Britain.

The stabilization of the currency today indicates the deterioration of the situation in the economy, the decline in living standards. We want to replace high-quality goods, which we used to get from the technologically developed world, with goods of our own production, of lower quality. Import substitution, which is being staked on, especially directive, with the help of a fist, only damages the economy.

- But Lukashenka has already reported $1.5 billion allocated by Russia for import substitution projects, hasn't he?

- Yes, but all these bonuses do not solve the problem. Isolation from the civilized technological world will cost Belarus and Russia a lot. Import substitution is not going to raise and maintain the living standards, they will keep falling.

To quickly find a replacement buyer for our goods, to change logistics, to replace the market of the European Union, Canada, the USA is hardly possible without losses. My prediction is if the government fails to improve relations with the technologically advanced world, we will face a deterioration and a 15-20% drop in GDP. At best, it can be reduced to 12-13%.

And the National Bank already shows inflation at 17%, and it will continue.