Belarusian industries boost output due to low comparative base
<p> Brief: </p> <ul type="disc"> <li>According to operational data shared by Belstat, industrial output increased by 8.3% year on year in January-February 2021. The main contributors to the output growth were oil refining, the chemical industry, and the energy sector.</li> <li>Single large enterprises accounted for up to 90% of the industrial output growth in Belarus.</li> <li>The decline in the food industry (minus 0.3%) took place due to a decrease in physical volumes of production of a number of important products and dye to the high comparative base of Q1 2020.</li> <li>Producers of construction materials demonstrated a significant drop in output, which was due to the high comparative base of Q1 2020, as well as a 7% reduction of construction works in January-February 2021.</li> <li>The output of the machine-building industry increased by 15.6%, while the energy sector saw a 15.9% increase.</li> <li>In January-February 2021, manufacturing and energy made a decisive contribution to the dynamics of Belarus’ GDP.</li> <li>The nature of growth in industry is unsustainable. It depends on the state of external demand, on which the largest exporting enterprises - Belaruskali, MTZ, BelAZ, MAZ, Naftan and Mozyr NPZ oil refinery - are heavily dependent. Potential demand for Belarusian products is constrained by, among other things, the coronavirus epidemic and likely sanctions on industry by the US and the EU.</li> </ul> <p> MINSK, Apr 5 - PrimePress. Belarus increased industrial production by 8.3% year on year in January-February 2021 to Br21.354 billion ($8.2 billion, $1/Br2.6), according to the National Statistics Committee of Belarus (Belstat). </p> <p> The production of coke and refined petroleum products increased by 44.1% to Br2.759 billion ($1.06 billion) in January-February 2021. </p> <p> The output of chemicals production increased 30% up to Br1.808 billion ($696.2 million). </p> <p> Output of metallurgical production and manufacture of fabricated metal products decreased by 12.5% in January-February 2021 to Br732.1 million ($281.9 million). </p> <p> Production of vehicles and equipment increased by 6.7% and amounted to Br952.8 million ($366.9 million). </p> <p> Production of food, beverages and tobacco products decreased by 0.3% down to Br5.083 billion ($1.96 billion). </p> <p> The production of rubber and plastic products and other non-metallic mineral products decreased by 7.5% in January-February 2021, down to Br1.161 billion ($447 million) as compared with January-February 2020. </p> <p> Production of machinery and equipment, not included in other groupings, increased by 15.6% in January-February 2021 and amounted to Br1.279 billion ($492.5 million). </p> <p> In the energy sector, the production growth over two months amounted to 15.9%. Production of electricity increased by 11.9%, heat - by 23.6%. </p> <p> According to the forecast of the Economy Ministry, in 2021 the gross added value in the mining industry will remain at the level of 2020, the manufacturing industry’s will increase by 3.1% and the energy industry’s will increase by 3.7%. </p> <p> The current year will see growth due to the low base of 2020. If we compare the pre-crisis 2019 and 2021, the Economy Ministry expects the mining industry to remain behind in terms of value added, the energy sector to reach the 2019 level and the manufacturing industry to exceed the 2019-2020 level. </p> <p> <span style="color: #005b7e;">Commentary</span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> Refining, chemicals and energy were the main contributors to industrial output growth in early 2021. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> At the beginning of 2021 there was a strong growth in output of petroleum products, mineral fertilizers and petrochemicals. As for petroleum products and petrochemicals, the growth in this sector was made possible by a greater utilisation of Russian crude at Naftan and Mozyr refineries. As the volume of crude oil supplied increased compared to the failed first quarter of 2020, so did the volume of finished products. The dynamics of fertilizer output is determined by the growth in physical production at Belaruskali. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In the energy sector, it is worth mentioning the effect of a colder winter on the background of an abnormally warm one in 2020, as well as the launch of the first unit of the Belarusian nuclear power plant in pilot operation mode. All this led to an increase in heat and electricity generation in winter 2021. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> According to our estimates, in January-February 2021 up to 90% of the industrial output growth in Belarus was provided by single large enterprises. A strong positive impact on the total output is provided by a combination of high year-on-year growth rates 2020 and the size of the enterprises themselves. In descending order of importance, the major contributors to Belarus’ industrial output are oil refinery in Gomel Oblast and Vitebsk Oblast (Mozyr NPZ and Naftan), chemical industry in Minsk Oblast (Belaruskali), the power sector in Grodno Oblast (Belarusian Nuclear Power Plant), machine building in Minsk Oblast (BelAZ), chemical industry in Vitebsk Oblast (Polimir), machine building in Gomel Oblast (Gomselmash). </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The food industry’s declining output occurred due to lower physical volumes of production of a number of important products and against the background of the high comparative base of Q1 2020. Specifically, meat output dropped by 7.2%, whole-milk products by 1.9%, and sugar output dropped by over 90%. The decline in sugar output is explained by the timing of sugar beet processing in 2020-2021 and a 19% decrease in the sugar yield in 2020 compared to the 2019 level in terms of physical weight. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> Among other commodity items, it is worth mentioning a decrease in production of finishing and construction materials - tiles (minus 7.1%), cement (minus 7.7%), bricks and blocks (minus 15.6%). These products are manufactured by companies in the "non-metallic mineral products" sub-section. In the first two months of 2021, the gross output of non-metallic mineral products declined by 7.5% year on year. This is due to a high comparative base of the first quarter of 2020, as well as a 7% drop in construction and installation works in Jan-Feb 2021. The National Bank surveys indicate a pessimistic economic sentiment in the real sector. In such an environment, demand for new construction (erection, modernisation and refurbishment of buildings and constructions) tends to be depressed. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> In mechanical engineering, output increased by 15.6%. The performance of manufacturing industries is being pulled up by companies producing tractors and dump trucks (MTZ and BelAZ). In the case of dump trucks (BELAZ), it should be noted that their output grows on last year’s record low, and current volumes do not ensure recovery of pre-crisis indicators. In particular, in January-February 2018 production of dump trucks totalled 183 units, while for the same period in 2019 it was 179 units. Production of dump trucks is still half of what it was in 2018-2019. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> According to our estimates, in January-February 2021 the manufacturing and energy sectors made a decisive contribution to the dynamics of Belarus' GDP. The economy as a whole grew by 0.8%, and without manufacturing and energy it would have fallen by about 1.4% by 2020. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The entire information and communication sector, to which the High Tech Park residents belong, contributed only about 0.2 p.p. to GDP. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> According to the official forecast, GDP growth is expected to accelerate to 1.8% in 2021. However, the previously strong growth momentum in the Hi-Tech Park has been lost and it is not clear whether it will recover with the relocation of IT employees. Industry could be the driver instead of IT workers, but even the official forecast gives industrial businesses a fading growth momentum. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The nature of growth in industry is unsustainable. The situation in the industry depends on the state of external demand, on which the largest exporting enterprises - Belaruskali, MTZ, BelAZ, MAZ, Naftan and Mozyr NPZ oil refinery - are heavily dependent. Potential demand for Belarusian products is constrained by, among other things, the coronavirus epidemic and likely sanctions on industry by the US and the EU. </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The good performance of the energy sector is due to the relatively cold winter and increased electricity exports to Ukraine and the Baltic States (via Russia). Further dynamics depend on weather conditions (temperature level before the end of the heating season and the date of its completion, presence or absence of heat waves in summer). </span> </p> <span style="color: #005b7e;"> </span> <p> <span style="color: #005b7e;"> The parliaments and governments of the Baltic states and Ukraine are launching legislative mechanisms to cease electricity imports from Belarus - for national security reasons. This will adversely affect the load on the Belarusian nuclear power plant and the energy system as a whole, and the costs of energy production within the country. Social and economic tension in the single-industry towns where the country’s largest TPPs are located, Novolukoml and Belozyorsk, cannot be ruled out.</span> </p> <p> </p>
2021-04-05
Primepress
Belarusian industries boost output due to low comparative base
Brief:
- According to operational data shared by Belstat, industrial output increased by 8.3% year on year in January-February 2021. The main contributors to the output growth were oil refining, the chemical industry, and the energy sector.
- Single large enterprises accounted for up to 90% of the industrial output growth in Belarus.
- The decline in the food industry (minus 0.3%) took place due to a decrease in physical volumes of production of a number of important products and dye to the high comparative base of Q1 2020.
- Producers of construction materials demonstrated a significant drop in output, which was due to the high comparative base of Q1 2020, as well as a 7% reduction of construction works in January-February 2021.
- The output of the machine-building industry increased by 15.6%, while the energy sector saw a 15.9% increase.
- In January-February 2021, manufacturing and energy made a decisive contribution to the dynamics of Belarus’ GDP.
- The nature of growth in industry is unsustainable. It depends on the state of external demand, on which the largest exporting enterprises - Belaruskali, MTZ, BelAZ, MAZ, Naftan and Mozyr NPZ oil refinery - are heavily dependent. Potential demand for Belarusian products is constrained by, among other things, the coronavirus epidemic and likely sanctions on industry by the US and the EU.
MINSK, Apr 5 - PrimePress. Belarus increased industrial production by 8.3% year on year in January-February 2021 to Br21.354 billion ($8.2 billion, $1/Br2.6), according to the National Statistics Committee of Belarus (Belstat).
The production of coke and refined petroleum products increased by 44.1% to Br2.759 billion ($1.06 billion) in January-February 2021.
The output of chemicals production increased 30% up to Br1.808 billion ($696.2 million).
Output of metallurgical production and manufacture of fabricated metal products decreased by 12.5% in January-February 2021 to Br732.1 million ($281.9 million).
Production of vehicles and equipment increased by 6.7% and amounted to Br952.8 million ($366.9 million).
Production of food, beverages and tobacco products decreased by 0.3% down to Br5.083 billion ($1.96 billion).
The production of rubber and plastic products and other non-metallic mineral products decreased by 7.5% in January-February 2021, down to Br1.161 billion ($447 million) as compared with January-February 2020.
Production of machinery and equipment, not included in other groupings, increased by 15.6% in January-February 2021 and amounted to Br1.279 billion ($492.5 million).
In the energy sector, the production growth over two months amounted to 15.9%. Production of electricity increased by 11.9%, heat - by 23.6%.
According to the forecast of the Economy Ministry, in 2021 the gross added value in the mining industry will remain at the level of 2020, the manufacturing industry’s will increase by 3.1% and the energy industry’s will increase by 3.7%.
The current year will see growth due to the low base of 2020. If we compare the pre-crisis 2019 and 2021, the Economy Ministry expects the mining industry to remain behind in terms of value added, the energy sector to reach the 2019 level and the manufacturing industry to exceed the 2019-2020 level.
Commentary
Refining, chemicals and energy were the main contributors to industrial output growth in early 2021.
At the beginning of 2021 there was a strong growth in output of petroleum products, mineral fertilizers and petrochemicals. As for petroleum products and petrochemicals, the growth in this sector was made possible by a greater utilisation of Russian crude at Naftan and Mozyr refineries. As the volume of crude oil supplied increased compared to the failed first quarter of 2020, so did the volume of finished products. The dynamics of fertilizer output is determined by the growth in physical production at Belaruskali.
In the energy sector, it is worth mentioning the effect of a colder winter on the background of an abnormally warm one in 2020, as well as the launch of the first unit of the Belarusian nuclear power plant in pilot operation mode. All this led to an increase in heat and electricity generation in winter 2021.
According to our estimates, in January-February 2021 up to 90% of the industrial output growth in Belarus was provided by single large enterprises. A strong positive impact on the total output is provided by a combination of high year-on-year growth rates 2020 and the size of the enterprises themselves. In descending order of importance, the major contributors to Belarus’ industrial output are oil refinery in Gomel Oblast and Vitebsk Oblast (Mozyr NPZ and Naftan), chemical industry in Minsk Oblast (Belaruskali), the power sector in Grodno Oblast (Belarusian Nuclear Power Plant), machine building in Minsk Oblast (BelAZ), chemical industry in Vitebsk Oblast (Polimir), machine building in Gomel Oblast (Gomselmash).
The food industry’s declining output occurred due to lower physical volumes of production of a number of important products and against the background of the high comparative base of Q1 2020. Specifically, meat output dropped by 7.2%, whole-milk products by 1.9%, and sugar output dropped by over 90%. The decline in sugar output is explained by the timing of sugar beet processing in 2020-2021 and a 19% decrease in the sugar yield in 2020 compared to the 2019 level in terms of physical weight.
Among other commodity items, it is worth mentioning a decrease in production of finishing and construction materials - tiles (minus 7.1%), cement (minus 7.7%), bricks and blocks (minus 15.6%). These products are manufactured by companies in the "non-metallic mineral products" sub-section. In the first two months of 2021, the gross output of non-metallic mineral products declined by 7.5% year on year. This is due to a high comparative base of the first quarter of 2020, as well as a 7% drop in construction and installation works in Jan-Feb 2021. The National Bank surveys indicate a pessimistic economic sentiment in the real sector. In such an environment, demand for new construction (erection, modernisation and refurbishment of buildings and constructions) tends to be depressed.
In mechanical engineering, output increased by 15.6%. The performance of manufacturing industries is being pulled up by companies producing tractors and dump trucks (MTZ and BelAZ). In the case of dump trucks (BELAZ), it should be noted that their output grows on last year’s record low, and current volumes do not ensure recovery of pre-crisis indicators. In particular, in January-February 2018 production of dump trucks totalled 183 units, while for the same period in 2019 it was 179 units. Production of dump trucks is still half of what it was in 2018-2019.
According to our estimates, in January-February 2021 the manufacturing and energy sectors made a decisive contribution to the dynamics of Belarus' GDP. The economy as a whole grew by 0.8%, and without manufacturing and energy it would have fallen by about 1.4% by 2020.
The entire information and communication sector, to which the High Tech Park residents belong, contributed only about 0.2 p.p. to GDP.
According to the official forecast, GDP growth is expected to accelerate to 1.8% in 2021. However, the previously strong growth momentum in the Hi-Tech Park has been lost and it is not clear whether it will recover with the relocation of IT employees. Industry could be the driver instead of IT workers, but even the official forecast gives industrial businesses a fading growth momentum.
The nature of growth in industry is unsustainable. The situation in the industry depends on the state of external demand, on which the largest exporting enterprises - Belaruskali, MTZ, BelAZ, MAZ, Naftan and Mozyr NPZ oil refinery - are heavily dependent. Potential demand for Belarusian products is constrained by, among other things, the coronavirus epidemic and likely sanctions on industry by the US and the EU.
The good performance of the energy sector is due to the relatively cold winter and increased electricity exports to Ukraine and the Baltic States (via Russia). Further dynamics depend on weather conditions (temperature level before the end of the heating season and the date of its completion, presence or absence of heat waves in summer).
The parliaments and governments of the Baltic states and Ukraine are launching legislative mechanisms to cease electricity imports from Belarus - for national security reasons. This will adversely affect the load on the Belarusian nuclear power plant and the energy system as a whole, and the costs of energy production within the country. Social and economic tension in the single-industry towns where the country’s largest TPPs are located, Novolukoml and Belozyorsk, cannot be ruled out.