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Belarus Economy
 
 
 

Most of the Belarusian economy remains state-controlled, and has been described as "Soviet-style." Thus, 51.2% of Belarusians are employed by state-controlled companies, 47.4% are employed by private Belarusian companies (of which 5.7% are partially foreign-owned), and 1.4% are employed by foreign companies. The country relies on imports such as oil from Russia. Important agricultural products include potatoes and cattle byproducts, including meat. As of 1994, the biggest exports from Belarus were heavy machinery (especially tractors), agricultural products, and energy products.

Historically important branches of industry include textiles and wood processing. As of the 1991 dissolution of the Soviet Union, Belarus was one of the world's most industrially developed states by percentage of gross domestic product (GDP) as well as the richest CIS state. Economically, Belarus involved itself in the CIS, Eurasian Economic Community, and Union with Russia. During the 1990s, however, industrial production plunged because of decreases in imported inputs, in investment, and in demand for exports from traditional trading partners. It took until 1996 for the gross domestic product to rise; this coincided with the government putting more emphasis on using the GDP for social welfare and state subsidies. The GDP for 2006 was $83.1 billion in purchasing power parity (PPP) dollars (estimate), or about $8,100 per capita. In 2005, the gross domestic product increased by about 9.9%, with the inflation rate averaging about 9.5%.

Belarus's largest trading partner is Russia, accounting for nearly half of total trade in 2006. As of 2006, the European Union is Belarus's next largest trading partner, with nearly a third of foreign trade. Because of its failure to protect labour rights, however, Belarus lost its EU Generalised System of Preferences status on 21 June 2007, which raised tariff rates to their prior most-favoured nation levels. Belarus applied to become a member of the World Trade Organisation in 1993.

The labour force consists of more than four million people, among whom women hold slightly more jobs than men. In 2005, nearly a quarter of the population was employed by industrial factories. Employment is also high in agriculture, manufacturing sales, trading goods and education. The unemployment rate, according to Belarusian government statistics, was about 1.5% in 2005. The number of unemployed persons totalled 679,000 of whom about two-thirds are women. The rate of unemployment has been decreasing since 2003, and the overall rate is the highest since statistics were first compiled in 1995.

The currency of Belarus is the Belarusian ruble (BYR). The currency was introduced in May 1992, replacing the Soviet ruble. The ruble was reintroduced with new values in 2000 and has been in use ever since. As part of the Union of Russia and Belarus, both states have discussed using a single currency along the same lines as the Euro. This has led to the proposal that the Belarusian ruble be discontinued in favour of the Russian ruble (RUB), starting as early as 1 January 2008. As of August 2007, the National Bank of Belarus is no longer pegging the Belarusian ruble to the Russian ruble. The banking system of Belarus is composed of 30 state-owned banks and one privatised bank.

Overview

Economy - overview
Belarus has seen little structural reform since 1995, when President LUKASHENKO launched the country on the path of "market socialism." In keeping with this policy, LUKASHENKO reimposed administrative controls over prices and currency exchange rates and expanded the state's right to intervene in the management of private enterprises. Since 2005, the government has re-nationalised a number of private companies. In addition, businesses have been subject to pressure by central and local governments, eg. arbitrary changes in regulations, numerous rigorous inspections, retroactive application of new business regulations, and arrests of "disruptive" businessmen and factory owners. A wide range of redistributive policies has helped those at the bottom of the ladder; the Gini coefficient is among the lowest in the world. Because of these restrictive economic policies, Belarus has had trouble attracting foreign investment. Nevertheless, government statistics indicate GDP growth has been strong in recent years, reaching more than 9% in 2008, despite the roadblocks of a tough, centrally directed economy with a high rate of inflation. Belarus receives discounted oil and natural gas from Russia and much of Belarus' growth can be attributed to the re-export of Russian oil at market prices. Trade with Russia - by far its largest single trade partner - decreased in 2007-08, largely as a result of a change in the way the Value Added Tax (VAT) on trade was collected. Russia has introduced an export duty on oil shipped to Belarus, which will increase gradually through 2009, and a requirement that Belarusian duties on re-exported Russian oil be shared with Russia - 80% was slated to go to Russia in 2008, and 85% in 2009. Russia also increased Belarusian natural gas prices from $47 per thousand cubic metres (tcm) in 2006 to $100 per tcm in 2007, and to $128 per tcm in 2008, and plans to increase prices gradually to world levels by 2011. Russia's recent policy of bringing energy prices for Belarus to world market levels may result in a slowdown in economic growth in Belarus over the next few years. Some policy measures, including improving energy efficiency and diversifying exports, have been introduced, but external borrowing has been the main mechanism used to manage the growing pressures on the economy. Belarus felt the effects of the global financial crisis in late 2008 and reached agreement with Russia in November for a $2 billion stabilisation loan and with the IMF for a $2.5 billion stand-by agreement in January 2009. In line with IMF conditionality, Belarus devalued the ruble approximately 20% in January 2009 and has tightened some fiscal and monetary policies. Belarus's economic growth is likely to slow in 2009 as it faces decreasing demand for its exports, and will find it difficult to increase external borrowing if the credit markets continue to tighten.

GDP (purchasing power parity)
$114.1 billion (2008 est.)


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