Nowe sposoby adaptacji. Gospodarki Białorusi, Rosji i Ukrainy w drugim kwartale

Belarus – economical growth, transit to Asia

The Belarusian economy continued to grow, reaching 5.5 per cent in the first half of 2024. Experts anticipate it to be at 4 per cent by the end of the year. Still, state-supported interior household consumption was the main reason for GDP growth but spending on investments besides played an crucial role. This last component is most likely a consequence of the improvement of the production capabilities of Belarusian companies considering the increasing competition from Russian and Chinese enterprises.

According to the independent investigation centre BEROC’s regular more than 1 4th of Belarusians are expecting a fall in income. Most of the respondents attribute this to a emergence in prices. Meanwhile, inflation remains under control. In the second quarter, it was kept at 6.1 per cent. The authorities continued to keep prices under control with administrative controls while maintaining a relaxed financial policy. The National Bank of Belarus left the basic interest rate unchanged. This was established in June last year at 9.5 per cent.

The situation in abroad trade, which is crucial for the Belarusian economy, remained complicated and unclear. The volume of exports continued to grow after the beginning of 2024. The dynamics of imports were besides akin to the results from the first half of the year, showing a 0.3 per cent emergence in GDP. However, the acquisition of abroad currency by enterprises (the highest rate since 2010) shows that firms will proceed to extend imports. This would not only be the consequence of a growth in consumption but besides investments in fresh production schemes mentioned earlier. These sometimes require high-tech equipment not present in Belarus.

Minsk tries to search additional abroad income. This can be seen in the effort to join the North-South transit corridor project, which has been pushed by Russia. Moscow plans to construct a series of logistic centres along the railway from its border with Azerbaijan to the confederate ports of Iran. The Russian government plans to invest 3 billion USD by 2030 in this project.

Analysis from authoritative experts in Baku and Minsk have suggested that there is simply a synergy between the Nort-South corridor and the West-East way that passes through Belarus. specified analysis points out the fact that in the first 4th of 2024 the transit between Belarus and China increased by 68 per cent. As a result, Belarus could be a hub for land transport between Asia and the West, while Azerbaijan could have a akin function between Asia and the South. In August, Chinese Premier Li Qiang’s visit to Minsk saw Belarus and China sign papers on cooperation regarding transit (particularly rail transit). This might propose possible advancement in this area. However, bilateral economical cooperation has usually resulted in more words than practice given Minsk’s advanced dependency on Moscow.

Russia – inflation and property rights

Inflation force remained 1 of the most crucial problems for the Russian authorities. At the end of July, the Central Bank of Russia’s (CBR) Board of Directors decided to rise the base rate to 18 per cent. Elvira Nabiullina, the head of the bank, underlined that this was a reaction to the continued emergence in inflation – it stood at 9.3 per cent in July. The CBR increased the inflation yearly forecast for 2024 to between 6.5 and 7 per cent (the authoritative mark is 4 per cent).

Nabiullina besides pointed out respective more problems that the Russian economy is facing. 1 would be the continuous growth in consumption that is not matched by production capabilities (one of the biggest problems being a shortage in the workforce). The second 1 is the growth in companies’ debt portfolios. This has been caused by state programmes that support specified borrowing. Finally, western sanctions may lead to a further increase in request for imported goods.

The Ukrainian incursion into the Kursk region may lead to the strengthening of any of these processes, at least at a regional level. Public investments in the building of fresh fortifications and the reconstruction of destroyed infrastructure, as well as support for internally displaced persons, could make more force erstwhile it comes to a emergence in salaries. It could besides further complicate the situation regarding the workforce.

These issues slowed the improvement of the Russian economy. However, GDP recorded a 4 per cent growth after the first half of the year. The budget deficit continues to be low. first estimates for the first half of 2024 show it at 0.5 per cent of GDP levels (a simplification by 2.5 times from the same period in 2023).

The Kremlin is utilizing the war situation to revise relationships in the property rights area. Russian services began investigating a legal expression that allows for the confiscation of resources erstwhile the individual controlling them has been given “extremist” status.

This procedure was first applied to the tv writer Alexander Nevzorov. In July his full household was declared “extremist”, resulting in the confiscation of property – 3 parcels of land, a car, and respective shares in companies.

Soon after that, the application of the expression was applied to a higher-level case. The Russian Prosecutor General’s Office started the procedure to place “extremist” position on the businessman Yuri Shefler and his companies. Shefler in the late 1990s took control of the company holding the rights to the “Stolichnaya” and “Moskovskaya” vodka brands. The Russian authorities have been trying to deprive him of the right to usage these trade names abroad. He has now been accused of supporting Ukraine and criticizing the Russian authorities (he has been outside Russia since 2002), which may lead to the seizure of his assets by the Russian state.

This procedure will let 1 of the “privatization deals” of the 1990s to be reversed. It may be applied more widely to another owners and entities in the future.

Ukraine – more taxes and working women, little electricity.

At the beginning of June, the Ukrainian government submitted a proposal to parliament for taxation government changes. This decision was dictated by the increasing request for financing defence efforts. These changes will increase the taxation burden on the economy by 4 to six per cent of GDP from September 1st.

The authors of the task have proposed an increase in the war taxation to 5 per cent, which would lead to an increase of individual taxation to 23 per cent (Ukraine has a flat taxation system). This would make a larger burden for lower income groups within the society. The same increase would be applied to individuals and tiny companies within the simplified taxation system, but for the alleged “third group” (usually IT and another professional services), where the burden will grow by six per cent.

Larger companies would pay 1 per cent of their income which, according to any experts, would lower their competitiveness against imported goods. The Ukrainian government is not planning any changes influencing imports, with the exclusion of car imports. The acquisition of a fresh car would be taxed at 15 per cent of its value. Moreover, the companies would be affected by an increase in excise taxation on fuel. another fresh taxes are to be levied on luxury goods: purchases of precious metals, jewellery, or the second in a year sale of a property.

Due to the intensification of the Russian rocket attacks, Ukraine has lost around 2 thirds of its energy production capacities. Deficiencies in the strategy are being replaced by imports, mainly from Hungary (around 40 per cent), Slovakia and Romania (each around 20 per cent). This has had a crucial impact on the functioning of the economy, which was reflected in a decline in the temper of entrepreneurs after May. In the regular opinion poll conducted by the National Bank of Ukraine (NBU) amongst businesses, problems with electricity are quoted as the most significant. any changes in business attitudes were visible only in July, as entrepreneurs adapted to energy shortages. Most companies were besides expecting a emergence in their goods and services prices.

The workforce shortage remained an crucial problem. This issue is structural since it is an effect of both mobilization and migration and, therefore, will proceed to hamper Ukrainian business activities in the future. This situation is leading to the feminization of the workforce. The data for 2023 shows that in construction 38 per cent of workers were female (20 per cent in 2021). In the mining industry, it was 49 per cent (27 per cent in 2021).

Despite these problems, Ukrainian GDP after six months of 2024 has reached 4.1 per cent. The NBU revised its prognosis and presently expects the economy to grow by 3.7 per cent in 2024.

The NBU continued to lower the basic interest rate. At the beginning of June, it was established at the level of 13 per cent. The management of the institution seems to be more cautious than external experts. IMF analysts already in March were calling for the lowering of the interest rate to the level it reached in June. In July inflation stood at 5.4 per cent, which is somewhat above the inflation mark of 5 per cent.

Where does this all lead?

Belarus evidently has the smallest area for manoeuvre. It is not the first time that Minsk has tried to actively aid make a fresh global economical task that would give it any degree of independency from Moscow. The Kremlin has always been able to pull Alyaksandr Lukashenka back. However, the fresh position of Azerbaijan in the Caucasus and the increasing position of China in the area, which Moscow perceives as its sphere of interest, may bring a different result this time.

The confiscation of property in Russia may bring any changes to the interior setup of power relationships between the different influence groups that make up the “Putin system”. The war overall has diminished to any degree and is effectively “a cake to be shared” among the 3 states. It has of course increased tensions but is inactive at a level that could be contained. But with the war inactive progressing, fresh conflicts may come to light.

Changes in Ukrainian taxation will most likely aid to increase budget income only to any extent. A deficiency of taxation that would importantly impact large companies or holdings will limit the expected inflow of resources. But even with a more crucial taxation overhaul, the Ukrainian budget would stay dependent on abroad support.

Kacper Wańczyk is an analyst focusing on Belarus, Russia and Ukraine and a PhD student at Koźmiński University in Warsaw. He is simply a erstwhile diplomat who has served in Belarus and Afghanistan, among another places.

“We suport the Belarusian Awakening’24” is simply a task co-financed by Solidarity Fund PL within the framework of Polish improvement cooperation of the Ministry of abroad Affairs of the Republic of Poland in the amount of PLN 230,000.

This publication expresses the views of the author only and cannot be identified with the authoritative position of the Ministry of abroad Affairs of the Republic of Poland.

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