Belarus has limited fiscal reserves to support enterprises and households; situation in real sector goes worse – EDB

<p> MINSK, Aug 18 - PrimePress. Belarus has limited fiscal reserves to support enterprises and households, which worsens the situation in the real sector, the Eurasian Development Bank (EDB) says in its Monthly Macroeconomic Review. </p> <p>   </p> <p> According to bank experts, the economic downturn in Belarus has slowed down significantly. In the first half of 2020, country’s GDP contracted by 1.7% y/y (against minus 1.8% in January-May). The decline slowed down thanks to the revitalization of domestic consumer activity and external demand against the backdrop of a gradual improvement in the epidemiological situation in the country and the easing of quarantine restrictions abroad. </p> <p>   </p> <p> “We assess the prospects for a further recovery of economic activity rather restrainedly: Belarus’ fiscal reserves to support the most affected industries and population are limited, and the financial situation of enterprises in the real sector has worsened,” reads the review. </p> <p>   </p> <p> Belarus’ industrial output grew by 0.9% in June after falling by 4.3% in the previous month. The food industry shows strong dynamics (a 7.4% increase in June after 3% in May) thanks to the gradual expansion of consumer demand within the country and abroad, as well as an increase in farm output. The restoration of potash fertilizers production continued after Belarus entered into contracts with Chinese and Indian counterparties. Industries focused on production of intermediate goods and investment demand showed multidirectional dynamics that remain moderate. In general, based on the performance in the first half of the year, industrial output decreased by 3.1%, and the decline was largely curbed through an increase in product inventories. As a result, the financial performance of real sector enterprises worsened: revenues fell in January-May by 6.7% and net profit by 67.9%. </p> <p>   </p> <p> “We expect that in this environment, a sustained recovery in the sector can take a long time,” reads the report. </p> <p>   </p> <p> According to the EDB, capital investment in Belarus shrank by 12.5% ​​in June after growing by 2.4% in the previous month, which indicates the instability of the recovery dynamics. </p> <p>   </p> <p> “As the economic sentiment and financial performance of organizations deteriorates, investment activity is likely to remain depressed this year,” the EDB says. </p> <p>   </p> <p> The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB charter capital totals US $7 billion. The bank’s member states are Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. End </p>

2020-08-18

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