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gradual reduction in the rate of export duty on oil and petroleum products from 30 % to zero in the period from 2019 to 2024 and a proportionate increase in MET.
According to the Belarusian authorities, Belarus’ budget revenue losses from the tax manoeuvre in 2019 alone are estimated at BYN600mn ($300mn).
In trade the volume of exports was up by 18% in the first seven months of this year , but trade deficit increased by 20% to $1.6bn. The problem is that as Belarus’s economy recovers that pulls in imports faster than industry can respond and increase exports.
However, retailers report a healthy growth in trade as real incomes are growing and driving consumption. A middle class is beginning to emerge and if Belarus follows the path of Russia this could drive growth for a decade.
2.0 Politics
2.1 The long road to Belarusian retail
Long known as the “last dictatorship in Europe” thanks to a throw away remark by former US Secretary of State Condoleezza Rice, Belarus is starting to move out of the shadows as the economy is maturing as it follows the other economies in the region and indeed outperforms most of them.
Belarus currently has the fastest growth rates in eastern Europe. GDP grew by 4.4% year-on-year in January-July, following a 4.5% y/y growth in the first half of the year, which compares to 1.8% in Russia and 3.6% in Ukraine. The Belarusian economy is recovering well on the back of the ongoing recovery in neighbouring Russia, which still dominates the republic’s economic fortunes.
And a middle class is emerging as the country has a surprising balanced income distribution. President Alexansder Lukashenko has been pushing to increase the average salary to BYN1000 ($461) per month from c.BYN800 now, but incomes have been rising steadily and Belarus’s current average income is on a par with Russia’s and ahead of that in Ukraine.
According to the latest survey Belarusian individuals with a monthly income between BYN300.1 (around $150) and BYN500 ($240) accounted for 44.6% of the population in January-March, versus 17% with monthly income of between BYN200.1 and BYN300 and the better off individuals with a monthly income of between BYN500.1 and BYN600 that make up 11.6% of the population in the first quarter of 2018. Those with over BYN600.1 make up another 22.6%.
Rising incomes is feeding into retail trade, which increased by 10.1% to BYN17.2bn ($8.6bn) year-on-year in January-May, according to Belstat. And that is fuelling the development of organised retail in the republic.
Eurotorg is Belarus’s leading supermarket chain and hoping to repeat the success of supermarket chains in its neighbours that have been portfolio investor darlings as they give direct exposure to the transformation of eastern Europe’s economies.
5 BELARUS Country Report October 2018 www.intellinews.com