May 13 – May 19, 2013

Finished products’ value at overstocked warehouses exceeded BYR30 trillion

The situation has not changed
Finished products’ value at overstocked warehouses exceeded BYR30 trillion

The increase in stocks in the whole country is primarily a result of key enterprises overstocking warehouses. If competitiveness of the Belarusian industry giants continues deteriorating, economic recession is inevitable.

In the regions the leaders in overstocking of warehouses are key businesses, enterprises-donors of the regional economies: Belarusian Autoworks (Minsk region), Mogilevkhimvolokno (Mogilev region), JSC Grodno Azot (Grodno region). As of April 1st, finished products’ value at overstocked warehouses exceeded BYR30 trillion, which is a two-fold increase compared with 2012. In the first place, it concerns engineering, pharmaceuticals, textiles, electrical equipment. Dairy producers are in a better situation.

First of all, most of the enterprises’ problems are caused by the decline in the attractiveness in the Russian market. Reduction of the Russian market for a number of Belarusian enterprises is due to two main factors: 1) Russian economy stagnation, 2) Russia’s WTO accession. Among the internal causes are the lack of domestic demand and a shortage of funds, since most funds are allocated for modernization.

There is no adequate response to changes in the external markets by the government and regional executive authorities. Gross regional product forecast is not adjusted, despite the current situation. Analysis of statements by regional officials in the media and during various meetings demonstrates that administrative measures are the main tools to unload warehouses, as well as manipulations with statistics. Local administrations heads are tasked to draft and present warehouses’ unloading schemes.

An alternative solution could be production output adjustment / reduction or temporary release of some workers (this scheme is implemented at the Minsk Automobile Plant and some enterprises in the Brest region). As for the sale of finished products, according to expert estimates, most Belarusian goods are sold in foreign markets at 5-6% of the production cost. Thus lower prices in order to unload warehouses will result in subsidizing low-price exports.

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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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