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Economic Recovery in Belarus

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High capacity utilization, owing in part to ambitious quantitative targeting; ... The banking system should be allowed to make lending decisions based on the ... – PowerPoint PPT presentation

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Title: Economic Recovery in Belarus


1
Economic Recovery in Belarus
  • Natalia Koliadina
  • IMF Resident Representative in the Republic of
    Belarus
  • December 3, 2009

2
Outline
  • Sources of economic growth
  • External environment, productivity changes and
    competitiveness
  • Post-crisis constraints to economic growth
  • Prospects for economic recovery.

3
Source of economic growth in 2001-08 supply side
  • Capital stock
  • Skilled labor
  • High capacity utilization, owing in part to
    ambitious quantitative targeting
  • Labor productivity growth exceeding that of its
    trading partners.

4
Source of economic growth in 2001-08 demand side
  • Favorable external demand
  • Demand enhancing policies.

5
External environment and productivity changes
  • The boom in Russia boosted Belaruss non-oil
    exports, while energy subsidies from Russia made
    Belaruss exports of oil product more profitable.

6
Changes in external competitiveness
  • Belaruss external competitiveness deteriorated
    prior to the crisis

7
Post-crisis constraints
  • External constraints to growth
  • Potential growth rates of Belaruss main trading
    partners are likely to be lower in the aftermath
    of the crisis
  • Easy access to the Russian market is no longer
    guaranteed
  • Belarus would not benefit to the same extent as
    in the past from preferential prices on oil and
    gas imports from Russia.

8
Post-crisis constraints
  • Domestic constraints to growth
  • Domestic savings have been lower than investment,
    putting pressure on an investment-driven growth
  • Returns on investment have been diminishing
  • Labor force is likely to shrink reflecting
    demographic trends.

9
Prospects for economic recovery
  • Market forces have to play a major role in the
  • allocation of resources
  • Price controls need to be reduced to a minimum
  • Wages need to be liberalized to reward high
    productivity labor mobility needs to be
    enhanced
  • Mandatory quantitative targets at the
    macroeconomic and enterprise levels need to be
    abolished.

10
Prospects for economic growth
  • Financial sector reforms would improve
  • private sectors access to credit resources
  • The banking system should be allowed to make
    lending decisions based on the profitability and
    project risks, rather than government
    recommendations.

11
Prospects for economic growth
  • Conditions for setting up new private businesses
    should be simplified
  • The regulatory burden on the private sector needs
    to be further reduced and greater flexibility in
    setting prices, wages and margins allowed.

12
Prospects for economic growth
  • An ambitious and transparent privatization agenda
    would help bring capital, technology, and
    management and marketing skills.
  • Foreign investment can help diversify Belaruss
    production base and export market.

13
  • Thank you!
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