Belarusian Regime Ruined Everything

Why the economic crisis in Belarus cannot become a time of new opportunities

Belstat published data on the dynamics and structure of the gross regional product for February. We see that the economy is still in a deep recession, but from a proctological point of view, this depth looks a little more optimistic than before.

In relation to January-February last year, the economic decline amounted to 3.6% in the country as a whole, while “negative growth” covers all regions without exception. Separately, it should be noted that the saddest indicators are shown by the capital (minus 6.3%), while in the Minsk region the decline has significantly decreased (minus 4.8% against minus 8.2% last month), and the Hrodna region can reach zero or even plus next month (now — minus 0.5%).

Speaking of macroeconomic indicators, it is important to understand how a crisis affects the economy. The word “crisis” itself has a negative connotation, and we really see a lot of unpleasant consequences associated with it: inflation, a decrease in the potential of the economy, bankruptcies, a drop in living standards, an increase in part-time employment, and much more.

But, at the same time, in most economic theories it is noted that a crisis also brings opportunities. Let's see what these opportunities are, and whether Belarus can realize them.

The crisis helps stimulate the economy. The fact is that it makes it possible to identify obvious and hidden negative trends that sometimes accumulated for many years, and with the competent leadership of the country to properly distribute efforts for their treatment. Unfortunately, this does not work in Belarus, since the authorities, instead of identifying problems and trying to solve them, prefer to “unsee” them. They do it in the most literal sense of the word, for example, by closing the statistics on sagging industries.

The crisis contributes to the growth of competitiveness. In difficult times, the exchange rate of the national currency may fall, which makes the country's products more in demand abroad. We saw this on the example of last year, when Belarusian goods became attractive to Russian consumers due to the sharp weakening of the Belarusian ruble against the Russian (albeit partially man-made) ruble. This allowed domestic goods to compete more actively in Russia, and on the shelves of Belarusian stores too.

Unfortunately, this year this advantage is in question. Because the shelves are already full, and the possibilities for competitiveness have become limited. The Russian market, although it looks bottomless, is by no means so for us. In addition, not all Russian manufacturers are happy with the arrival of Belarusians. And the exchange rate effect is gradually fading away.

A crisis allows unpopular decisions to be made. Simply put, when everything goes to hell anyway, you can explain to the population that you need to be patient, carry out reforms that are sensitive to society (for example, raising the retirement age or reforming the state-owned enterprise sector), but then get a result from which everyone will benefit. And again in Belarus these opportunities are used specifically. As a rule, they are aimed not at improving the economy, but only at solving momentary political problems. And, as practice shows, in the future, these unpopular decisions lead to even greater problems.

A crisis is a flow of capital. We are talking about a trend in which money goes from banks to real business, because quite often enterprises need decent injections in order to recover. And here we have problems. Today, there is tremendous pressure on banks to use the free money that has been generated in the economy to support not promising areas, but zombie enterprises. As a result, both banks and private businesses suffer, and the economic situation in the country as a whole is going down the drain, as this leads to an increase in non-payments, which the budget eventually has to pay.

On the bottom line, we see a sad picture: the government of Belarus, having received most of the possible negative consequences of the crisis, manages to screw up literally all the possible advantages.

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