Belarus may continue relaxing monetary policy in absence of shocks in FX market – EDB
<p> MINSK, Jun 17 - PrimePress. Belarus may continue moderating monetary policy in the absence of additional shocks in the foreign exchange market, reads the monthly macroeconomic review by the Eurasian Development Bank (EDB) for May 2020. </p> <p> </p> <p> The National Bank of Belarus lowered the refinancing rate on May 20, 2020 by 0.75 percentage points to 8% per annum. The goal is to foster economic activity, including by easing the credit burden on business and households. If there are no additional shocks (mainly in the foreign exchange market), maintaining inflation near the target in the medium term may require further moderation of monetary policy, the EDB says. </p> <p> </p> <p> EDB experts say that inflation in Belarus slowed down in May 2020 to 4.9% year on year from 5.4% in April 2020. A significant reduction in consumer activity and the normalization of the situation in the foreign exchange market were the key factors in reducing the intensity of inflationary processes. </p> <p> </p> <p> “We expect a slight increase in the growth rate of the consumer price index in June due to the low comparative base effect of the previous year. In the future, weak domestic demand may lead to a slowdown in inflation,” reads the review. </p> <p> </p> <p> In April 2020, economic activity in Belarus decreased significantly. Gross domestic product (GDP) decreased in January-April by 1.3% (minus 0.3% in January-March) due to a fall of investment and consumer activity and external demand. Capital expenditure on the procurement of machinery, equipment and vehicles dropped by 19.2% in April, which may be associated with the COVID-19 pandemic and transport and logistics difficulties. </p> <p> </p> <p> “In the coming months, we expect moderate business activity to continue due to the negative impacts of the pandemic. The GDP dynamics lead to a significant negative output gap, which will have a disinflationary effect. According to our estimates, weak domestic and foreign demand will continue to have a restraining effect on the dynamics of the industrial sector in the coming months,” the experts say. </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>
2020-06-18
Primepress
MINSK, Jun 17 - PrimePress. Belarus may continue moderating monetary policy in the absence of additional shocks in the foreign exchange market, reads the monthly macroeconomic review by the Eurasian Development Bank (EDB) for May 2020.
The National Bank of Belarus lowered the refinancing rate on May 20, 2020 by 0.75 percentage points to 8% per annum. The goal is to foster economic activity, including by easing the credit burden on business and households. If there are no additional shocks (mainly in the foreign exchange market), maintaining inflation near the target in the medium term may require further moderation of monetary policy, the EDB says.
EDB experts say that inflation in Belarus slowed down in May 2020 to 4.9% year on year from 5.4% in April 2020. A significant reduction in consumer activity and the normalization of the situation in the foreign exchange market were the key factors in reducing the intensity of inflationary processes.
“We expect a slight increase in the growth rate of the consumer price index in June due to the low comparative base effect of the previous year. In the future, weak domestic demand may lead to a slowdown in inflation,” reads the review.
In April 2020, economic activity in Belarus decreased significantly. Gross domestic product (GDP) decreased in January-April by 1.3% (minus 0.3% in January-March) due to a fall of investment and consumer activity and external demand. Capital expenditure on the procurement of machinery, equipment and vehicles dropped by 19.2% in April, which may be associated with the COVID-19 pandemic and transport and logistics difficulties.
“In the coming months, we expect moderate business activity to continue due to the negative impacts of the pandemic. The GDP dynamics lead to a significant negative output gap, which will have a disinflationary effect. According to our estimates, weak domestic and foreign demand will continue to have a restraining effect on the dynamics of the industrial sector in the coming months,” the experts say.
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