Фото: Pixabay
Belarus’ GDP returned to growth in April. According to Belstat, GDP increased by 0.2% in January–April. Before that, GDP had been declining throughout the first quarter. In a monthly express analysis, MacroBy experts outlined possible reasons for the April rebound.
According to their estimates, April GDP grew by around 1.8% compared with the same period last year. Growth compared with March of this year amounted to about 0.6% after seasonal adjustment.
“The recovery of oil refining had a positive effect on industrial and transport indicators, while increased energy generation amid the cold April weather provided an additional temporary positive impact on output,” the review says.
The authors also drew attention to a sharp increase in value added in the information and communications sector at the beginning of the second quarter. One possible reason may be the relocation of Russian IT workers against the backdrop of internet problems in Russia.
“It may be assumed that the sharp acceleration in the IT sector was caused by tighter internet restrictions in Russia and the possible re-registration of some Russian business operations through Belarusian legal entities, along with the corresponding transfer of part of the workforce. Since the monthly value added of the information and communications sector is calculated mainly through extrapolation of changes in the average number of employees, the administrative transfer of personnel could have mechanically increased value added. This hypothesis requires verification: if the IT sector’s results also sharply decline in May–June, it will prove invalid,” the document states.
Consumer demand in April declined compared with March, although it remains above potential. Investment activity also continued to recover.
MacroBy believes GDP growth for January–April may amount to 0.5%. It is expected to rise further to 1% over the course of the year.
“High budget spending and loose monetary conditions will support domestic demand, while the ‘revival’ of business activity in Russia will contribute to the recovery of manufacturing industry. Inflation will remain around 5% year-on-year in May–June amid a strong Belarusian ruble and strict price controls. Low GDP growth and moderate inflationary pressure prompted the National Bank to reduce the refinancing rate by 0.5 percentage points from June 1 to 9.25%. This decision was expected and will not have a significant impact on financial market rates: the average rate on term deposits will remain low in an environment of structural excess liquidity, while the average rate on new market loans will continue to gradually decline into the 10.5–11% range,” the authors of the analysis believe.