Belarus’ export and GDP may fall, inflation may rise in 2021 amid U.S. sanctions against Belneftekhim

<p> MINSK, May 12 - PrimePress. The Eurasian Development Bank (EDB) in late June may revise its 2021 GDP forecast for Belarus because of the U.S. sanctions against Belneftekhim, the EDB said in the May edition of its macroeconomic review. </p> <p>   </p> <p> As previously reported, the U.S. Department of the Treasury on 3 June 2021 will resume the effect of economic sanctions on nine Belarusian companies - Belneftekhim Concern and its U.S. representative office, as well as Belneftekhim-controlled Belshina, Grodno Azot, Grodno Khimvolokno, Lakokraska, Naftan, Polotsk-Steklovolokno, and Belarusian Oil Trading House. This was the US response to the actions by Belarusian authorities during the political crisis in Belarus following the 2020 presidential election. </p> <p>   </p> <p> "In H1 2021, the annual GDP growth rate could increase. This is due to the fact that a year earlier, the first wave of the pandemic occurred in the second quarter, during which the output of service industries declined significantly due to social distancing. In the second half of 2021, the low base effect will wear off and economic growth will slow down with subdued investment and consumer activity. The EDB’s forecast for Belarus’ GDP growth in 2021 is 0.1%. It may be updated at the end of June, including due to the resumption of restrictive measures against some companies of Belneftekhim Concern by the U.S. after June 3," says the EDB macroeconomic review. </p> <p>   </p> <p> The EDB released the current forecast for Belarus’ 2021 GDP growth in March 2021: EDB experts believe it will increase by 0.1% in 2021. The EDB then indicated that the Belarusian economy would continue to stagnate in 2021. The EDB projected Belarusian GDP growth of 0.1%, which is 0.2 p.p. higher than the bank’s previous projection made in 2020. This is due to a smaller than previously expected negative impact of the second wave of the pandemic on services in late 2020 - early 2021. </p> <p>   </p> <p> As previously reported, GDP growth in Belarus is planned at 1.8% in 2021, according to the medium-term financial program of the national budget for 2021-2023, approved by government resolution #227 of April 20, 2021. </p> <p>   </p> <p> Exports under threat of sanctions </p> <p>   </p> <p> The EDB notes that Belarus’ manufacturing industry increased production by 9% in the first quarter. At the same time, growth accelerated to 12% in March. Oil refining (+47.1% in Q1) and the chemical industry (+24.2%) maintained their strong performance amid the start-of-year difficulties of 2020. Steady growth was recorded in the traditionally export-oriented engineering sectors. </p> <p>   </p> <p> The bank’s recent macroeconomic review points out that stronger external demand and undervaluation of the Belarusian ruble support the real sector. Thus, the physical volume of Belarusian exports in January-February increased by 22.5%, including energy products - by 141.3%, investment - by 26.3%, consumer goods - by 7.6%. </p> <p>   </p> <p> “Industrial growth may start to slow down in Q2 as low-base effects in oil refining and potash production are exhausted. There are risks of a decline in export supplies due to renewed U.S. restrictions on petrochemical companies,” the bank said in its outlook. End </p>

2021-05-13

Primepress