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September 3 – September 9, 2012

Economic performance in the first half of 2012 in the regions

The situation has not changed
Economic performance in the first half of 2012 in the regions

Pre-election ‘boost’ in the economy allowed meeting key performance indicators in the regions to a certain extent. At the same time, unjustified wage growth creates conditions for a new crisis, and the labour outflow from the regions reflects the population’s crisis expectations.

In the first half of 2012 the majority of the regions managed to achieve 50 percent of the projected GRP growth. And there is every reason to believe that by the year end, the regions will meet the projected GRP level. During the past 6 months, GRP growth was the highest in Vitebsk region (121%), followed by the Minsk region (104.7%), Minsk (103.6%), Mogilev (102.7%), Gomel (102.5%), Grodno (102%) and Brest (96.2%) regions.

Vitebsk region could meet the projected growth parameters due to the production of petrochemical products only. The overall situation in the region looks quite difficult. Currently, only about one-third of companies in the region are highly profitable (more than 10-11%). Vitebsk regional authorities demanded creation of ten new enterprises each employing at least 50 persons in all districts in the Vitebsk region in 2013. Other regions, with the exception of the Brest region showed a relatively flat GRP growth rate.

The main disturbing trends in the regional economy are associated with the real wages’ growth, which is much higher than the production growth rate. Also, almost every region (except Minsk) has a negative trend regarding the population employed in the economy. It means there is an outflow of the economically active population from the regions. Thus, regardless of the official rhetoric about soon reaching the pre-crisis standard in salaries, the general social background can be defined as future inflation expectations and seeking for personal crisis management strategies.

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Once a week, in coordination with a group of prominent Belarusian analysts, we provide analytical commentaries on the most topical and relevant issues, including the behind-the-scenes processes occurring in Belarus. These commentaries are available in Belarusian, Russian, and English.
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