Reduced export potential impacts regional economies

Despite the trade surplus reported by the majority regions, all regions, except Vitebsk Oblast, experience lower export potential. Belarus’ accession to the Customs Union with Russia and Russia’s WTO accession reduce the demand for Belarusian goods in the main market.

So far, most regions have managed to maintain a positive trade balance. However, almost all regions demonstrate reduced export proceeds from trade in goods, compared with 2012 and higher import growth rates against export growth. All this is regardless enacted administrative measures to curb imports – in addition to trade barriers imposed by the central government, local authorities issue special permits for purchasing imported equipment (for example, in the Brest region).

In all regions, reduced export potential is primarily due to the reduced export growth at the main exporting enterprises. Thus, in the Minsk region Belaruskaliy, BMZ and BelAZ exports have reduced. In Mogilev region Mogilevkhimvolokno and Mogilev Metallurgical Works’ exports have reduced. To keep up the export levels, Belarusian companies have to expand markets and bare additional costs to supply goods to distant markets. In Vitebsk region a sharp drop in exports was due to the termination of solvent and lubricant schemes (Russian oil products reselling).

It should be noted that in addition to reasons linked with the decline in exports caused by Belarus losing to other competitors over Belarusian consumer goods quality, the situation is also affected by world market price fluctuations. Thus, JSC “Belarusian Metallurgical Plant” – managing company of “Belarusian Metallurgical Company” reduced exports in January – June 2013 by 7% compared with same period in 2012 – down to USD 660 million. Simultaneously, in real terms, during the same period exports remained at January-June 2012 level.