Belarus Macroeconomic Forecast, №1(6), June 2013
Recent gains in external price competitiveness have been exhausted during 2012. Furthermore, an active wage policy in 2012 brought real unit labor cost up to its medium term level. Hence, there is no more room to increase real wages without a corresponding deterioration in net exports. Thus, we expect a steady deterioration in net exports in 2013 and 2014. Alongside, real wages will grow by 9.4% in 2013, but afterwards their growth is going to weaken considerably causing the same trend in household consumption. Against this background, capital investments are going to become the engine of growth. However, this policy is unable to guarantee a steady pace of growth, along with increasing external imbalances. In 2013, we expect GDP to grow by 3.8% and by 2.5% in 2014.
The current equilibrium observed in financial markets is rather fragile. However, the authorities seem to ease monetary policy along with the attempt to provide a more or less stable nominal exchange rate. This policy will be successful only in case of adequate amount of external borrowings. If that is the case, we expect the nominal exchange rate to be USD/BYR 9200 and 9500 by the end of 2013 and 2014, correspondingly, although the depreciation might be much more severe in case external financing cannot be identified. We expect 17.8% and 9.6% of average annual inflation for 2013 and 2014, correspondingly.