When Russia Sneezes... – A presentation on the impact of the Russian crisis on the Belarusian Economy by Kateryna Bornukova (June 2017)

1. When Russia Sneezes..
The Impact of the Russian Crisis on the
Belarusian Economy
Kateryna Bornukova, Igor Livshits

2. Background
§ Russia main export market
– Around 40% of exports
– 67% of exports other than petroleum oils/potash
§ Crisis in Russia in 2015
– Dec 2014 devaluation
– GDP growth -3.7%
§ One door closes, another one opens
– Countersanctions (Aug 2014)
– Sanctions against Ukraine, Turkey …

3. The Crisis in Belarus
§ Exports to Russia in 2015 shrunk
– From $15 bln to $10 bln
§ Belarusian GDP in 2015 shrunk
– From $76.1 to $54.6 bln
– -3.9% in constant prices
§ Crisis was not only about Russia
– Structural problems
– Oil prices
– Exports to the rest of the world down from $21to $16.5 bln

4. Key Findings
§ Impact in 2015
– Forgone trade: $4.8 bln (+0.3 bln and -5.1 bln)
– Forgone value added: -1.6% (lower bound)
§ Lasting effect:
– 2016 still $4.4 bln below 2014 in trade
– GDP continues its decline (now 6.3% below 2014)
§ The other side of the coin
– Some industries benefited from (counter)sanctions
– Food industry up and continues growing

5. Two perspectives
§ Macro
– Trade data
– GDP/Output data
§ Goods level data
– Illustrative examples
– Trade Comedy
– Trade is concentrated: top 45 goods typically capture around 60%

6. Monthly Exports from Belarus to
Russia
Monthly exports from Belarus to Russia, 2012-2016. Billions of USD. Comtrade/Belstat data
0.4
0.6
0.8
1
1.2
1.4
1.6
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
BlnUSD

7. Monthly Exports from Belarus to
Russia
Monthly exports from Belarus to Russia, 2012-2016. Billions of USD. Comtrade/Belstat data
1.33
0.87
0.4
0.6
0.8
1
1.2
1.4
1.6
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
BlnUSD

8. Macro Perspective
§ Identify effect of the Russian crisis on exports (category by
category)
– Naive calculation
– Adjusting for trends: by how much the rest of trade changed?
§ Link exports to output by sector
§ Estimate effects on GDP through effects on output

9. Macro Perspective: Results
§ Effect on GDP:
– Naive: - 3.1%
– Adjusted: - 1.6%
• Trade with the rest of the world also fell
• The source of trouble is not only Russia
§ Winners/Losers:
Food processing 2.45%
Rubber and plastics -7.48%
Machinery -13.22%
Electrical eq-ment -8.38%
Transport eq-ment -23.54%

10. Anecdotes: Trucks
0
2000
4000
6000
8000
10000
12000
2012 2013 2014 2015 2016
Trucks 5-20 tons, Russia Trucks > 20 tons, Russia

11. Anecdotes: Trucks
0
1000
2000
3000
4000
5000
6000
0
2000
4000
6000
8000
10000
12000
2012 2013 2014 2015 2016
Trucks 5-20 tons, Russia Trucks > 20 tons, Russia
Trucks 5-20 tons, rest of the world Trucks > 20 tons, rest of the world

12. Anecdotes: Furniture
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
2013 2014 2015 2016
Russia Rest of the world

13. Anecdotes: Apples
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
2012 2013 2014 2015 2016
Exports to Russia

14. Anecdotes: Apples
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
2012 2013 2014 2015 2016
Exports to Russia Imports

15. Anecdotes: Cheese
0
50000000
100000000
150000000
200000000
250000000
2012 2013 2014 2015 2016
Exports to Russia Imports

16. What’s next?
§ Russian economy is improving
– No signs of return to strong growth
– Trade is slowly recovering
– Growth in Belarusian exports/manufacturing
– However, Belarusian GDP continues to decline
§ Not many signs of diversification
– Trade with the rest of the world declines in 2015 and 2016
– Share of exports to Russia increased from 38% in 2015 to 46% in
2016

17. Conclusions
§ Belarus lost 1.6% of GDP due to decline in trade with
Russia
– Trade channel explains at least 40% of GDP decline in 2015
§ Winners are few despite huge devaluation
– Food industry – winner due to countersanctions
§ No crisis benefits in sight
– Negligible number of goods capable to diversify
– Trade with the rest of the world continues to decline