Country Report Belarus December 1998 Main report

Foreign trade & payments: Non-CIS imports have continued to rise

Over the first eight months of the year total imports grew by 9.2% compared with the same period last year. Whereas Russia increased its share of total exports to 68%, its share of imports has fallen to 53% of Belarus's total, as a result of an 18.8% surge in imports from non-CIS states over the first eight months of 1998. This increase in Western imports has further compounded Belarus's economic difficulties, by significantly increasing the trade deficit and contributing to a large current-account deficit that will likely create further financing problems. In the first nine months of 1998 the country posted a trade deficit of $1,301.9m, up from $1,093.7m over the corresponding period last year. Trade deficits with non-CIS states proved especially problematic, with eight-month data showing a rise of approximately 80% compared with last year -- particularly as a result of increased deficits with Germany ($250m), Poland ($70m) and Italy ($61m). Belarus's declining market share outside the CIS will prove extremely difficult to recoup, largely as a result of neglect of trade diversification. Combined with the country's growing appetite for imports from the West, this will help lead to a current-account deficit that will become increasingly unsustainable, given the lack of foreign-currency inflows. According to recent press reports, the level of inflows over the first nine months of the year dropped by $650m compared with last year's level, including only $11.7m of foreign direct investment (FDI), down by 60% from last year -- only Armenia, Georgia, Tajikistan and Uzbekistan rank lower among former Soviet states in terms of FDI per head.

Current account ($ m) 1997 1998 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Exports 1,570.6 1,708.0 1,959.2 2,144.8 1,772.9 1,893.5 of which: barter 467.3 482.8 475.3 624.8 n/a n/a Imports 1,968.8 2,049.0 2,181.6 2,518.6 2,257.3 2,262.4 of which: barter 638.7 600.1 582.3 720.0 n/a n/a Trade balance -398.2 -341.0 -222.4 -373.8 -484.4 -368.9 % of GDP(a) -14.7 -11.3 -5.6 -10.5 -15.2 -9.9 Net services 140.2 138.4 116.3 142.9 111.8 137.0 Net income -18.8 -15.9 -15.2 -29.4 -13.0 -25.1 Net transfers 16.1 26.6 21.0 14.7 15.2 43.4 Current-account balance -260.7 -191.9 -100.3 -245.6 -370.4 -213.6 % of GDP(a) -9.6 -6.3 -2.5 -6.9 -11.6 -5.7 (a) Belarus Economic Trends estimates. Source: National Bank of Belarus, published in Belarus Economic Trends.

© 1998 The Economist lntelligence Unit Ltd. All rights reserved
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