Performance of Belarussian Economy in 2010 - Facts and Figures

Review of the Social and Economic Development of the Republic of Belarus In 2010

Brief overview

In 2010, the Belarusian economy was gradually returning to the pre-crisis trajectory of economic growth. According to the results of the year, the GDP grew by 7.6% in comparison with growth by 0.2% posted  in 2009. The industry grew by 11.3% and was the main driver of the economic growth while the agriculture grew by 2.0%. Among the industry branches, the highest growth demonstrated machine building (16.7%), ferrous metallurgy (16.0%); forest, woodworking and pulp-and-paper industry (14.9%) and chemical industry (13.3%).

From the demand side, the main contribution to growth was made by fixed capital investment, having grown by 16.9%. Supported by the real wage growth by 14.9%, the household consumption has also made a considerable contribution to the acceleration of the GDP growth, especially in the IV quarter, that is also confirmed by the growth of the retail trade turnover by 17.1% according to the results of the year including that by 19.4% in the IV quarter.
As the demand in the countries being the main trade partners of Belarus was restored, the noticeable revival in foreign trade took place. In 2010, the export of Belarusian goods and services grew by 20.0% and the import of goods – by 22.6%. As a result, the deficit of trade in goods and services was 7.4 billion US dollars in comparison with 5.5 billion US dollars in 2009. The decisive contribution to the worsening of foreign trade balance was made by the increase of trade deficit in energy goods by 1.7 billion US dollars while the balance of trade in non-energetic goods went down by as little as 0.7 billion US dollars. The balance of trade in services has improved by 0.25 billion US dollars in comparison with 2009.

The current account deficit of balance of payments increased to 8.5 billion US dollars or 15.6% of GDP. This deficit was financed by 15% at the cost of foreign direct investment, the net inflow of which was 1.3 billion US dollars or 2.4% of GDP. The main sources of the debt financing were the last tranche of the “stand-by” credit from the IMF received in March and issueing of Eurobonds of the Republic of Belarus in July and August in the total amount of 1 billion US dollars. As a result, the gross foreign debt increased by almost 6.5 billion US dollars or 29.2% for the year 2010 and reached 28.5 billion US dollars (52.2% of GDP). The volume of international reserves (SDDS) decreased by 11% in 2010 and came to 5.0 billion US dollars or 1.6 month of import of goods and services as of January 1, 2011.

The monetary and credit policy was aimed at supporting the stability in the banking system and in the foreign exchange market. The main task of the National Bank remains to be maintaining the stable dynamics of the exchange rate of Belarusian rouble and providing the conditions for stable growth of the Belarusian economy. In 2010, the exchange rate was bound to the basket of currencies consisting of US dollar, euro and Russian rouble in equal proportions. According to the results of the year, the nominal exchange rate of Belarusian rouble to the basket of currencies has reduced by 1.8%. The real effective exchange rate of the rouble has decreased by 5.7%. In the course of the year, the National Bank decreased gradually the level of interest rates. The refinancing rate was decreased from 13.5% as of the beginning of the year to 10.5%. In the fall of the year some acceleration in consumer inflation was observed, the annual figure for 2010 stood at 9.9%; however, the National Bank’s real interest rates of liquidity allocation remained at positive level.

The fiscal policy in 2010 was aimed at ensuring the balanced budget with maintenance of the social orientation of the on-budget expenditures. The consolidated budget in 2010 was implemented with the deficit of 4.2 trillion roubles or 2.6% of the GDP. Here the incomes in nominal terms have increased by 4.3% and reached 48.8 trillion roubles or 29.9% of the GDP. The expenditures in nominal terms have increased by 7.9% and reached 53 trillion roubles or 32.5% of the GDP.

The public debt as of January 1, 2011 was 61.0 trillion roubles (including the guaranteed debt) or 37.4% of GDP and has increased by 36.9% in the course of the year. The domestic public debt was 32.0 trillion roubles or 19.6% of the GDP, and increased by 45.2% from the beginning of the year. The external public debt was 9.7 billion US dollars or 17.8% of the GDP and increased by 22.8%.

The situation in the banking system remained stable. 2010 was another year of rapid growth of main quantitative indicators of the banking system. The assets of banks have risen by 51.2% and reached 131.2 trillion roubles or 80.5% of GDP as of January 1, 2011. The banks’ claims to the economy have risen by 39.9% in the course of the year, the regulatory capital – by 31.5%. The capital adequacy over the banking system was 20.5% as of January 1, 2011. The share of the distressed assets was less than 3.6% of the total amount of the assets subject to credit risk as of January 1, 2011. The total profit of the banking system grew by 53.8% in 2010. The average return of assets (ROAA) reached 1.7% and the average return of the regulatory capital – 11.8%. All banks finished the year 2010 with profit.

In 2010, the Government continued the course aimed at the acceleration of the liberalization and structural reforms in the economy.

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