Economy of Belarus

By | April 29, 2022

According to cheeroutdoor, the economic situation in Belarus in recent years is quite complex and contradictory. Under the influence of the financial crisis in the Russian Federation in August 1998, miscalculations in economic policy, changes in the external economic situation and other negative factors, economic growth observed from the 2nd half. 1996, slowed down significantly. For most of the most important economic indicators, the growth rate has slowed down compared to 1997-98, and for some parameters there has been an absolute decline.

However, despite the decline in growth rates at the turn of the 20th-21st centuries, in general, over the past 5-7 years, the Belarusian economy has largely recovered from the severe crisis that hit it in the first years of the independence of the republic. Thus, the country’s GDP in 2002 amounted to 98.4% of the level of 1991, industrial products – 113%, production of consumer goods – 121%. At the same time, agricultural production amounted to only 77% of the 1992 level, investment in fixed assets – 51%, transportation of goods by transport enterprises – 23%.

The GDP of Belarus in dollar terms in 2002 amounted to about 14.1 billion dollars, GDP per capita – 1425 dollars. In terms of purchasing power parity of the currency, the republic’s GDP, according to 2001, amounted to 82.7 billion dollars, per capita population – 8295 dollars. The country’s share in the world economy is insignificant and is calculated in fractions of a percent. On the scale of the CIS, however, the share of Belarus is quite significant; in the total GDP of the Commonwealth in 2001 it was 2.9%, in industrial production – 3.9%. Belarus, earlier than most other CIS countries, reached the pre-crisis level in terms of the most important economic indicators.

Market reforms have led to some reduction in employment in Belarus. However, due to the “soft” reform model chosen by its leadership and the economic growth observed since the mid-1990s, this decline was not significant. The number of people employed in the economy, which in 1991 amounted to 5023 thousand people, in 1995 decreased to 4410 thousand, and in 2002 to 4381 thousand people. Unemployment in 2002 was 3.0%. The most serious economic problem in Belarus is inflation, the rate of which during the period of reforms was the highest in the CIS. As a result of a significant tightening in con. 1990s Monetary and financial policy in recent years managed to significantly reduce the inflation rate – from 251.2% in 1999 to 107.5% in 2000 and 34.8% in 2002, but this level remained significantly higher than predicted.

A characteristic feature of the sectoral structure of the Belarusian economy is a high share of services. In 2002, the share of services in gross value added was 53%, while the share of industry was 30%, agriculture, forestry and fisheries 11%, and construction 6%. In the total number of people employed in the economy, the share of those employed in the service sector accounted for 54%, in industry and construction 34%, in agriculture, forestry and fisheries 12%.

The main sector of the economy is industry, which accounts for about 30% of GDP, over 60% of fixed assets of industries producing goods, and more than 27% of those employed in the national economy. In the total volume of industrial production in 2002, the fuel and energy industry accounted for 23%, metallurgy 3, chemical and petrochemical 12, mechanical engineering and metalworking 22, forestry, woodworking and pulp and paper industry 5, building materials industry 4, light industry 7, food 18 %.

The fuel and energy industry includes enterprises for the extraction and processing of oil and peat and for the generation of electricity. The leading place in the fuel industry is occupied by oil refineries (refineries), primarily the Mozyr Oil Refinery (Mozyr, Gomel region) and the Naftan Production Association (Novopolotsk, Vitebsk region). The capacities of these plants make it possible to process about 25 million tons of oil annually; at present, the annual volume of refining at refineries is 10–13 million tons. Own oil production does not exceed 2 million tons per year, with a demand of 8–10 million tons; most of the oil for processing comes from the Russian Federation. The electric power industry includes thermal power plants and hydroelectric power plants with a total capacity of 7.8 million kW, district boiler houses with a capacity of 7.5 thousand Gcal / h, about 7 thousand km of backbone high voltage transmission lines, over 2,000 km of heating networks and over 240,000 km of distribution electric networks. More than 80% of the fuel consumed by the Belarusian energy system is natural gas, which is completely imported from the Russian Federation.

The machine-building and metal-working industry produces a wide range of products: metal-cutting and woodworking machines, electric motors, trucks, buses, tractors, televisions, refrigerators, washing machines, etc. The leading enterprises are the Belarusian Automobile Plant (BelAZ) (Zhodino, Minsk region), Minsk Automobile
Plant (MAZ), Minsk Motor Plant (MMZ), Minsk Tractor Plant (MTZ), Gomselmash Production Association (Gomel), Minsk Electrotechnical Plant, Atlant Production Association, Horizont Production Association (Minsk), PO “Vityaz” (Vitebsk).

The chemical and petrochemical industry produces mineral fertilizers, synthetic resins and plastics, chemical fibers and threads, car tires, household chemicals, etc. The largest enterprises are PA Belaruskali (Salihorsk, Minsk region), PA Azot (Grodno), PA Khimvolokno (Grodno, Mogilev, Svetlogorsk), PA Polymir (Novopolotsk, Vitebsk region), Belshina plant (Bobruisk, Mogilev region). The food industry produces mainly meat, oil and fat and dairy products, granulated sugar, bakery and confectionery products, pasta, cereals, alcoholic and non-alcoholic drinks, and tobacco products.

The light industry of Belarus includes the textile, knitwear, clothing, footwear, leather and fur industries. The largest enterprises are Alesya JSC (Minsk), which produces knitwear, the Baranovichi knitwear and clothing factory (Baranovichi, Brest region), the Brest knitwear factory Elma, the Bobruisk fur factory, the Orsha linen mill (Orsha)., Vitebsk region), JSC “Milavitsa” (Minsk), which produces women’s underwear, LLC “Belwest” and LLC “Marko” (Vitebsk), which produce shoes, etc.

The forestry, woodworking and pulp and paper industries produce lumber, plywood, furniture, paper, cardboard, wallpaper and other products. The largest enterprise is the association “Pinskdrev” (Minsk), which includes a number of enterprises and industries.

The metallurgical industry is represented by ferrous metallurgy enterprises producing steel, rolled ferrous metals, wire, fasteners and other types of products. The leading enterprise is the Belarusian Metallurgical Plant (Zhlobin, Gomel region).

The building materials industry produces more than 150 types of building materials and products – cement, reinforced concrete sleepers, slate, wall materials, panels, reinforced concrete poles for power transmission lines, etc.

An important place in the structure of the economy is occupied by agriculture, which accounts for about 10% of Belarus’ GDP and more than 30% of fixed assets of industries producing goods. The country uses about 9.0 million hectares of agricultural land, incl. 5.7 million hectares of arable land.

Agriculture specializes in dairy and meat animal husbandry, growing potatoes and flax. Of grain crops, mainly barley, rye and wheat are grown, as well as oats, buckwheat, and corn. In 2002, the gross grain harvest amounted to 5.99 million tons. One of the most important agricultural crops is potatoes, the harvest of which in 2002 amounted to 7.42 million tons. Industrial crops (in particular, flax) occupy 4% of the total sown area, forage crops – 42%. Vegetable growing is developed mainly near large cities. Fruit crops are also grown (apple, cherry, plum, pear, sweet cherry).

The main branch of animal husbandry is the breeding of cattle, mainly dairy-meat and dairy breeds. Pig breeding is developed, sheep breeding is to a lesser extent; poultry farming is widespread. On horseback In 2002, the number of cattle amounted to 4.0 million heads, pigs – 3.3 million, sheep and goats – 0.1 million heads. Fishing is common in rivers and lakes.

Belarus has a developed transport network; the most important highways connecting the Russian Federation and other CIS states with the countries of Western and Central Europe pass through its territory. The length of public railways is 5533 km, incl. electrified 894 km; the length of public roads is 80.0 thousand km, incl. with hard surface 69.3 thousand km. The length of international highways is 1530 km. Pipeline transport includes a network of oil and gas pipelines; The main oil pipeline “Druzhba” and the gas pipeline “Yamal-Europe” pass through the territory of Belarus.

The volume of cargo transportation by transport enterprises (excluding pipelines) in 2002 amounted to 156.2 million tons, the volume of passenger transportation (excluding urban electric transport) was 1649 million people.

Belarus has a network of civil aviation airports, including 5 international airports. The largest airport – “Minsk-2” – connects the republic with 39 countries. Navigation is carried out along the Pripyat, the Dnieper-Bug Canal, the Dnieper, the Sozh, the Berezina.

The entire territory of the republic is covered by telephone, telegraph, radio and television communications.

Domestic trade has developed rapidly in recent years. Retail turnover through all sales channels in 2001 increased by 28.2% compared to the previous year, and by 12% in 2002. In 2001, 70% of the retail turnover was formed by trade enterprises; the market share was 30%. The share of food products in the retail turnover was 65%, non-food 35%.

The volume of paid services to the population increased by 9% in 2001, and by 8.7% in 2002. In the total volume of paid services in 2000, household services accounted for 18.4%, passenger transport services 26.8, communications 12.6, housing and communal services 16.4, preschool education 1.2, culture 2.0, tourism -excursion services 1.2, physical culture and sports 0.5, medical services 2.2, health resorts 7.6, legal services and banks 0.4, other types of paid services 10.7%.

The development of tourism in Belarus is associated with the rich historical and cultural heritage of the republic. The main attractions are the capital of the country, Minsk, the Spaso-Efrosinevsky Church of the 12th century. (Polotsk, Vitebsk region), Farny Cathedral, Church of the Bernardine Monastery (Grodno), Rumyantsev Palace 18-19 centuries. (Gomel), Church of the Annunciation of the 12th century. (Vitebsk), the memorial complex “Brest Hero Fortress” (Brest). A special place for tourism is the national reserve “Belovezhskaya Pushcha” (Brest region).

The economic policy of the Belarusian leadership is aimed at restructuring the country’s economy, modernizing its main industries, and creating a socially oriented market economy. When carrying out market reforms, the path of smooth, gradual transformation was chosen with the active regulatory role of the state. Most of the economy is under state control; state-owned enterprises account for about 55% of the total number of people employed in the economy and almost 2/3 of GDP. Privatization is proceeding at a relatively slow pace and under tight state control. The state regulates a significant part of prices, the system of state orders for the production of a number of important types of products is maintained.

Industries declared priority, to one degree or another enjoy the support of the state. For 2001-05, the following priorities for the socio-economic development of the republic have been determined: the formation of an effective healthcare system; activation of innovation and investment activities; increasing exports of goods and services; further development of housing construction on a non-issue basis with the maximum use of non-budgetary sources of financing; development of the agro-industrial complex and related industries.
In recent years, the leadership of Belarus has made certain adjustments to its economic policy, strengthening its orientation towards the development of market relations in a number of areas. The processes of denationalization and privatization in industry have intensified, the list of goods and services, the prices of which are regulated by the state, has been reduced; it is planned to reform the agrarian sector, to reduce the scale of state interference in the activities of business entities.

Since the autumn of 1999, the National Bank (NB) of Belarus has been implementing a new concept of monetary policy, which provides for a significant tightening of this policy in order to curb inflation (including a sharp limitation on the scale of concessional lending to the economy). The tight monetary policy of the NB contributed to the reduction of inflation; at the same time, along with other factors, it led to a serious deterioration in the financial position of many enterprises. The share of unprofitable enterprises in their total number, amounting to 16.2% at the end of 1998, to con. 2000 increased to 23.4% and by April 2003 – up to 50.3%.

The profitability of the national economy as a whole decreased from 12.7% in 2000 to 7.3% in January-March 2003. Belarus’ foreign exchange market began to liberalize; in September 2000, the multiplicity of exchange rates that had existed for several years was put an end to and a single rate of the Belarusian ruble was introduced.

In Belarus, with the beginning of market reforms, a two-tier banking system was created, consisting of the National Bank (1st level) and a network of commercial banks (2nd level). By the beginning of 2003, there were 28 commercial banks in the country, among which there are 4 largest banks authorized to serve government programs: Belarusbank, Belagroprombank, Belpromstroybank and Belinvestbank.

At the beginning of 2003, foreign capital was present in the statutory funds of 23 commercial banks; according to the NB, the share of foreign capital in the national banking system as of January 1, 2003 was 8.7%. The revenues of the state budget of Belarus in 2001 amounted to 34% of GDP, in 2002 – 34%, expenditures – respectively 35 and 34% of GDP. The budget deficit in recent years has been covered by loans from the National Bank and the issuance of government securities.

The main sources of revenue for the republican budget in 2002 were value added tax (30%), income tax (12.6%), foreign trade revenues (10.3%), road tax (10.3%), excises (10,one%). The main items of budget expenditures were financial assistance to budgets of other levels (13%), agriculture (8%), social policy (7.7%), education (6.7%), prevention and elimination of consequences of emergencies and natural disasters (6.2%), national defense (5.6%).

The current system of taxation in Belarus was introduced in 1992. The taxes and fees collected by the levels of the budget system are divided into 3 groups: nationwide; taxes paid to the budgets of the regions and the city of Minsk; local taxes and fees. The budget system is based on receipts from the three most important taxes – value added tax, income tax and excises. In the coming years, it is planned to reduce the tax burden on the economy, including a reduction in the rates of certain taxes and fees.

The external state debt of Belarus is about 740 million dollars, which corresponds to about 5.7% of the country’s GDP.

The standard of living of the population since ser. 1990s has a steady upward trend. In 2002 real incomes of the population increased by 2.33 times compared to 1995 and 1.49 times compared to pre-reform 1991. In 2001, real disposable incomes of the population increased by 29%, in 2002 by 8%. Wages have been constantly growing in recent years and amounted to the equivalent of $109 at the beginning of 2003. At the same time, due to the difficult financial situation of many enterprises (especially in the agricultural sector), wage delays are not uncommon. Wage arrears as of March 31, 2003 amounted to the equivalent of $21.9 million; according to some estimates, 57% of the working population do not receive wages on time.

The subsistence minimum at the beginning of 2003 was the equivalent of $44. The share of the population with monetary incomes below the subsistence level decreased from 46.7% in 1999 to 28.9% in 2001.

The average monthly income of an average Belarusian family, according to the data of the Ministry of Statistics and Analysis, in the IV quarter amounted to. 2001 $131, of which wages accounted for 61.6%, business and personal income 3.2%, agricultural sales 2, real estate 1, dividends and rental income 0.1, pensions 24.1, benefits 1.8, material assistance from relatives 3.4%.

In January-September 2002, monetary expenditures amounted to 78.3% of the population’s monetary income, current savings – 21.7%. In the structure of cash expenditures, 89.8% accounted for the purchase of consumer goods and services, 10.2% for taxes on income and property and other obligatory payments and contributions. More than 1/2 of the money spent was on food. In 2002, bank deposits of citizens in the national currency increased, according to the National Bank, by more than 2 times, and in foreign currency – by 24%. By the beginning of 2003, almost 667 billion Belarusian rubles (347 million in dollar terms) and more than 390 million US dollars were in the accounts of individuals.

Despite the growth in real incomes of the population, the problem of poverty is acute in Belarus. According to the criterion established by the government, a person is considered poor if his monthly income is less than 60% of the subsistence minimum, which is $26.4 in dollar terms. According to this criterion, the number of poor at the beginning of 2003 was 694,700 people, or 7% of the population. To combat poverty, a system of targeted social support for the poor has been developed and is beginning to be introduced.

An exceptionally important role in the Belarusian economy is played by the foreign economic bloc. The foreign trade turnover exceeds the republic’s GDP by 10-20%; the state of foreign economic relations largely determines the economic situation in the country. The dynamics of foreign trade turnover in recent years has been unstable. In 1998-99, under the influence of the Russian financial crisis, the volume of foreign trade fell noticeably; in the subsequent period, an upward trend prevailed.

The foreign trade balance of Belarus is consistently negative, which is primarily due to a large deficit in trade with the main trading partner – the Russian Federation.

Belarus maintains trade and economic relations with 166 countries of the world. In 2002, the CIS countries accounted for about 62% of foreign trade turnover, and for other countries, about 38%. The structure of exports and imports of Belarus in trade with the CIS countries and with other countries differ significantly. In exports to the CIS countries in 2002, the leading place was occupied by machinery, equipment and mechanisms (18.8%), means of transport (17.9%), chemical industry products, polymeric materials, plastics, rubber, rubber and products from them (10, 6%), textile materials and textile products (10.4%); exports to other countries were dominated by mineral products (42.6%), chemical industry products, polymeric materials, plastics and products made from them (18.2%), non-precious materials and products made from them (8.8%). In imports from the CIS countries, the main place was occupied by mineral products (37.3%), non-precious metals and products from them (14.3%), machinery, equipment and mechanisms (11.0%), chemical industry products, polymeric materials, plastics, rubber, rubber and products from them (11.8%); Machinery, equipment and mechanisms (25.0%), products of the chemical industry, polymeric materials, plastics, rubber, rubber and products from them (18.2%), means of transport (14.9%) were imported from other countries.

The main trade partner of Belarus is the Russian Federation, which in 2002 accounted for 57.9% of its foreign trade turnover, incl. 50.1% export and 65.1% import.

The volume of Belarusian-Russian trade in 2002 amounted to 9.89 billion dollars, incl. Belarusian exports to the Russian Federation – 4.05, imports – 5.84 billion dollars. Enterprises of Belarus and the Russian Federation maintain close production (including cooperative) ties with each other; in total, more than 8 thousand enterprises of the two countries are connected by mutual deliveries of products. In recent years, significant progress has been made in the development of economic integration between Belarus and the Russian Federation: a customs union is being formed, a number of joint production programs are being implemented, and preparations are underway for the introduction of a single currency.
Other major trading partners of Belarus are Germany, Ukraine, Poland, Latvia, Lithuania.

In 2002, the leading places in the country’s exports after the Russian Federation were occupied by Latvia (6.4%), Germany (4.3%), Ukraine (3.4%), Poland (3.4%), Lithuania (3.2%), in imports – Germany (7.7%), Ukraine (3.2%), Poland (2.4%). In the development of the Belarusian economy, an important role is given to attracting foreign investment. For 2002-10, the total investment requirement is estimated at $39 billion, of which foreign investment should be $13 billion. However, the funds of foreign investors in recent years account for only an insignificant part of the total volume of investments in fixed capital – from 1.5 to 4%.

The total volume of net foreign direct investment in Belarus for 1994-2002 amounted to 1.45 billion US dollars. By the beginning of 2003, 3912 enterprises were registered in Belarus with the participation of investors from more than 80 countries (including 430 enterprises with the participation of Russian investors). The main volume of investments in authorized funds of joint ventures and foreign enterprises comes from the USA (16.5%), Germany (13.3%), the Netherlands (12%), Poland (11.2%), Great Britain (7.1%), Cyprus (6.6%). Foreign investments are made in the industry (woodworking, food, chemical, mechanical engineering, metalworking), transport, trade, public catering.

In October 2001, the Investment Code came into force, aimed at improving the investment climate in the country (including for foreign investors). Attraction of foreign investments in Belarus is also facilitated by the activities of 4 free economic zones created on the territory of the country (“Brest”, “Minsk”, “Gomel-Raton” and “Vitebsk”).

Economy of Belarus