The International Monetary Fund has revised its growth forecast. Alyaksandr Papko explains why the optimism of the financial institution has gone down and why experts look at Belarus with skepticism.
The US trade wars with China, the problems of the German automakers, the slowdown in China, Argentina and Turkey — all this made the International Monetary Fund look at the forecasts of the world economy with less optimism. The IMF puts even less hope on the economy of Belarus.
Instead of the expected 3 percent, Belarus this year will grow by 1.8. Due to the fall in world oil prices, Russia may have even worse results than Belarus.
“As a rule, neither the World Bank nor the IMF have exact predictions. They later change their forecasts several times during the year, trying to guess what will happen at the end of the year. Therefore, I would not treat seriously the information that they reduced the forecast by one and a half percent. Overall, we live poorly and will not live better,” explains economist Leanid Zlotnikau.
The IMF does not predict a growth in demand for Belarusian goods in the major market for us, which is Russia. But it does predict substantial losses from the Russian tax maneuver.
IMF Forecast: How much will the economy grow this year?
Poland – 3.8%
Ukraine – 2.7%
Belarus – 1.8%
Russia – 1.6%
“Russian oil refining will receive compensation from the Russian budget, and our oil refining industry will not receive this compensation. This reason alone explains why there will be more problems for the Belarusian economy than for the Russian one,” said Vadzim Iosub, senior financial analyst at Alpari.
The economic growth of 2% per year is also growth in itself, but everyone can feel the difference of even a little more than a percent. With a 3% increase in Belarus, it will take about 15 years to achieve the same level of welfare as in today’s Poland or Lithuania. With growth of less than 2% it will be 25 years.
International financial institutions think that we cannot grow like Poland or Lithuania, at a rate of four percent a year, due to unprofitable state-owned enterprises, excessive dependence on the Russian market and a large foreign debt.
“Countries like Belarus can grow and develop thanks to foreign investment. As long as we keep our private property unprotected and do not have independent courts that can protect this property, we receive only selective investments,” says Vadzim Iosub.
Even the government of Belarus does not have hopes for an economic boom. The current budget is designed to grow only 2 percent. However, these plans may not be realized. Everything traditionally depends on Russia. If the Russian economy feels worse, Moscow will tighten its belts too.
Alyaksandr Papko, belsat.eu