Belarus: Window of Opportunity to Enhance Competitiveness and Sustain Economic Growth
This Country Economic Memorandum for Belarus takes stock of the growth trends in the country’s economy since 1996, reviews the evidence of the accumulated challenges and risks within the existing growth patterns, and provides recommendations aimed at strengthening growth sustainability. In sum, while economic growth in the last nine years has been impressive, the report argues that maintaining the current growth strategy would lead to a gradual erosion of economic competitiveness. The government should make significant policy adjustments by reorienting its policies toward ensuring a better business environment and a smaller size of government.
Economic growth in Belarus has been genuine and robust, especially in recent years. An analysis based on the comparison of business conditions survey results with the official growth data have revealed rather high correlation in the identified growth trends, supporting the argument that economic growth in Belarus has been real and not just a statistical phenomenon.
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1. Macroeconomic Framework For Growth:
Recent Trends And Risks
The chapter presents an overview of macroeconomic developments in Belarus since 1996, including the sources and structure of the country’s economic growth. It also analyzes the role of the government’s macroeconomic policies in supporting growth, including the provision of state support to the real sector, as well as employment and wage benefits from the recent economic expansion. Special attention is paid to the risks for future growth associated with Belarus’ macroeconomic performance.
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2. Industrial Performance:
Productivity, Competitiveness, and Medium-Term Risks
Industry is the critical sector of the Belarusian economy. Its performance largely defines overall economic trends in the country, while its importance exceeds by far the nominal share of the sector in output (30 percent of GDP) and employment (26 percent of jobs).
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3. Enterprise Restructuring In Industry:
Do They Do It Differently In Belarus
The chapter analyzes changes in the performance of Belarusian firms in terms of conventional quantitative indicators such as profitability, sales growth, and international competitiveness, as reflected, for example, in factor productivity and export growth.
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4. Trade And Growth
Belarus is a small open economy with a merchandise trade turnover to GDP ratio of 111 percent on average for the period 1996-2004. To better understand Belarus’ trade performance, the analysis is based on comparisons with neighboring countries.
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5. The Business Environment For Enterprise Sector Development
This chapter looks at the links between the business environment and the development of theenterprise sector. The business environment is analyzed in terms of a nexus of policies which regulateentry and exit, regulatory institutions, infrastructure and corporate governance legislation.
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6. Performance And Prospects Of The Agro-Food Sector
This chapter reviews the performance of the agricultural and food processing sector since 2000. Itanalyses the main bottlenecks for future development in the sector and outlines recommendations tosupport the sustainable development of the sector.
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7. Developments In The Energy Sector
At the time of independence, Belarus inherited an extensive electricity and gas transmission networkand significant oil refining capacity. However, the country indigenous energy resources are limited and it is therefore heavily dependent on imports of primary energy fuels, essentially from Russia.
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8. Priority Directions For Reforms
This final chapter summarizes the policy recommendations that follow from the analysis concerning economic growth in Belarus.
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