ECONOMIC & COMMERCIAL SECTION

BELARUS: SOCIAL AND ECONOMIC DEVELOPMENT
September 2005

Over the recent years, the Republic of Belarus has steadily outperformed CIS and European countries in terms of economic growth rates.

In the first half of 2005, Belarusian economy performed well enough and, compared to the first half of 2004,
· Gross Domestic Product grew by 8.9 %;
· Industrial Production grew by 10.5 %;
· Agricultural Production grew by 10.1 %;
· Consumer Commodities Production grew by 10.2 %;
· Capital Investments grew by 119.1 %;
· Foreign Trade in goods and services grew by 10.6 % which was made up by an increase of 19.5 % in exports of goods and services;
· For the first time over recent years, Belarus reached a surplus of $ 294.4 million in Foreign Trade Balance comprising only goods.

Significant economic growth and its beneficial impact on the social development of the country are acknowledged by the World Bank in the Country Economic Memorandum “Belarus: Window of Opportunity to Enhance Competitiveness and Sustain Economic Growth” of 10 June 2005. The document reveals, in particular, that gains of the economic growth are widely distributed across different layers of the population. The structure of Belarusian economic growth is not typical of the transitional economies, and the Belarusian people gained more than neighbour countries’. The above conclusions impartially confirm the progressive nature of Belarusian economic development.

As far as many socio-economic ratings are concerned, Belarus has an advantage over other CIS countries and transitional economies. In particular, unemployment rate (as of late June 2005) is 1.7 % in economically active population which is the lowest in CIS and Eastern Europe.

Another IMF report on the Belarusian economic situation gives a positive estimate to the economic development of Belarus. The information digest of 1 August 2005 says that the economic development in Belarus is sustainable resulting from the economic policies aimed at raising revenues. Due to the balanced budget, stable currency rates and growing credibility of the banks and national currency, the inflation rate has decreased, foreign currency reserves are expanding, the government debt is on its low, in mid-2005 the current account deficit diminished.

According to the UN Food and Agriculture Organization,

· While developed countries from Western and Central Europe (including both old and new EU neighbours) and CIS countries show a slower growth of agricultural produce output per capita, Belarus experiences a steady tendency of increasing performance in this field;
· Agricultural produce output per capita in 2003 (based on the volume of output in 1999-2001) for Belarus was 110.8, while for Italy it was 91.3, for Austria – 91.7, for France – 93.0, for Germany – 93.1, for Greece – 93.7, for the UK – 96.7, for Portugal – 97.3, for Spain – 106.2, for the Czech Republic – 90.6, for Slovakia – 91.0, for Hungary – 95.3, for Poland – 97.4, for Bulgaria – 102.8, for Romania – 106.0, for Slovenia – 106.4, for Lithuania – 109.6, for Latvia – 111.0, for Ukraine – 95.6, for Georgia – 110.0, for Russia – 110.4, for the US – 97.6;
· Alongside developed nations, Belarus is one of those countries where a percentage of population lacking sufficient nourishment is less than 2.5 % while that of Ukraine is 3 %, of Latvia and Russia – 4 %, Slovakia and Estonia – 5 %, Kyrgyzstan – 6 %, Croatia – 7 %, Bosnia and Herzegovina – 8 %, Turkmenistan – 9 %, Bulgaria, China and Moldova – 11 %, Kazakhstan – 13 %, Azerbaijan – 15 %, Uzbekistan – 26 %, Georgia – 27 %, Armenia – 34 %, Tajikistan – 61 %.

According to the UNDP Human Development Report 2005, Belarus keeps on outperforming CIS countries in education and health care and is ahead of many developed countries, as far as individual rates in these areas are concerned. Specifically, our country:
· spends on education (6 %) less than only 12 countries out of 57 countries showing a higher level of human development, ahead of such developed countries as Australia (4.9 %), Canada (5.2 %), the Netherlands (5.1 %), the US (5.7 %), Japan (3.6 %), Ireland (5.5 %), Switzerland (5.8 %), the UK (5.3 %), France (5.7 %);
· is ahead of all CIS countries in terms of adult (99.6 %) and teenager (99.8 %) literacy;
· spends on health care (4.7 %) more than 22 countries out of 57 showing a higher level of human development, including Poland (4.4 %), Bulgaria (4.4 %), Latvia (3.3 %), Lithuania (4.3 %) and Estonia (3.9 %);
· in terms of spendings on health care per capita, holds the first standing with $ 583 per year among CIS countries (Russia - $ 535, Ukraine - $ 210, Kazakhstan - $ 261, Armenia - $ 232) and spends on health care more than 10 countries out of 57 showing a higher level of human development, including Lithuania ($ 549), Latvia ($ 477), Bulgaria ($ 499);
· in terms of medical staff per 100,000 people (450 doctors), is significantly ahead of all CIS countries (Russia – 417, Ukraine - 297) and is outperformed only by three countries (the US, Italy and Cuba) out of 57 showing a higher level of human development;
· among CIS countries, has the lowest rate of infant mortality (13 deaths per 1,000 new-borns) and child mortality aged less than 5 (17 deaths per 1,000 children). The first rate places Belarus ahead of 7 countries, the second one – ahead of 6 showing a higher level of human development;
· incidence of poor nourishment in Belarus (2 %) is lower than in all CIS countries and 14 countries showing a higher level of human development.

According to the UNCTAD report “The Digital Divide: ICT Development Indices 2004”, Belarus is in the 55th position in terms of information and communications technologies spread and leads other CIS countries, with Kazakhstan in the 71st, Moldova – 78th, Armenia – 81st, Azerbaijan – 90th, Uzbekistan – 92nd, Russia – 94th, Ukraine – 111th.
As follows from the report by the Vienna Institute of International Studies (Wiener Institut für Internationale Vergleiche) of July 2004, inequalities of incomes in different population groups are insignificant. For instance, the Gini coefficient (indicator of incomes differentiation showing social inequality) has been almost the same since 1992 and amounted to 0.34 in 2001 which is by far lower than those of Russia (0.52) and Ukraine (0.45).
According to the Vienna Institute of International Studies (March 2005, Study No. 314, “GDP Expansion, Improved Prospects for European Integration”), Belarus in terms of GDP growth is ahead of Central and Eastern European countries (except Ukraine) and Russia. The deficit in its current balance of payments is smaller than that of Central and Eastern European countries.
According to the UN Economic Commission for Europe, (Economic Survey of Europe 2005, No. 1), Belarus has seen a 22.1 % increase in industrial production between 1989 and 2003, with only Turkey and Uzbekistan ahead in the targeted region. The average figure for the same period for CIS is minus 30.6 %.

According to the UN Economic Commission for Europe (press release No. 102, January 2005), unemployment tends to steadily decrease in Belarus. For instance, in the second quarter of 2004 the unemployment rate in Belarus was 2.4 %, in the third quarter of 2004 it was 2.2 %. For Russia it was 8.2 % in 2003, for Georgia – 10.7 %, for Ukraine – 9 %, for Armenia – 9.8 %.

According to the UNCTAD Trade and Development Reports 2002-2004, Belarus has reached a 9.1 % average annual increase in exports while in transition economies this indicator is 7.7 %, in developed economies – 4.1 %, across the world – 5.3 %.

According to the UNCTAD World Investment Report 2004: The Shift Towards Services, Belarus ranks 56 in the world in terms of the inward FDI potential index. Compared to 1994-1996, it ascended the table of standings by 22 positions, leading the CIS countries except Russia (ranking 33). Ukraine holds 94th place, Kazakhstan – 78th place, Bulgaria – 64th place, Romania – 83rd place.

According to the WTO World Trade Statistics 2003 summarizing the results of the year 2003, Belarus ranks 9 in 22 Central and Eastern European and Central Asia countries in terms of exports ($ 10 billion).

According to the EBRD Transition Report 2004, as per the outcomes of the year 2003, Belarus ranks 11 in 27 Central and Eastern European and CIS countries in terms of the estimated real GDP. As far as this indicator is concerned, Belarus is ahead of all CIS countries, most South-East Europe countries (in particular, Bulgaria, Bosnia and Herzegovina, Romania, Croatia) and a few EU members (Latvia and Lithuania). Belarus is among the countries with the highest rates of budget revenues and GDP growth, budgetary expenditures comparable to those of EU members, low rates of the sovereign and external debt.

According to the European Neighbourhood Policy Communication on Wider Europe of May 2004 by the European Commission,
· Belarus is by far ahead of Ukraine and Moldova in terms of GDP per capita. For Belarus it is 1353 Euro, for Ukraine – 855 Euro, for Moldova – 417 Euro;
· Life expectancy in Belarus (68 years) is higher than those of Ukraine (67.2 years), Moldova (67 years) and Russia (64.8 years);
· The volume of foreign direct investment raised in 2003 was $ 453 million for Belarus ($ 45.3 per capita), $ 117 million for Moldova ($ 27.2 per capita), $ 693 million ofr Ukraine ($ 14.1 per capita).
According to the World Development Report 2005 of the World Bank, the volume of foreign direct investment attracted into the Belarusian economy in 2002 was $ 247 million, with $ 25 per capita, compared to $ 21 in Russia and $ 14 in Ukraine.

According to the Global Development Finance Report 2004 of the World Bank, out of developing and transition economies Belarus has the lowest total external debt which is 7 % of gross national income.

As the UN/UNDP Representation said during the conference “Achieving the First Goals of the Millenium” (2 November 2004, Minsk), Belarus faces no absolute poverty: in 2003 only 1 % of population had income below $ 2 a day.

According to the World Bank’s Report “Belarus: Poverty Assessment. Can Poverty Reduction and Access to Services Be Sustained?” of December 2004,

· Belarus recovered GDP growth rapidly after the economic crisis of the beginning of the 1990s;
· Belarus reduced poverty levels significantly, maintained wide coverage of basic education and health services;
· Belarus pursued socioeconomic policies successful in maintaining living standards and reducing poverty better than in several transition economies;
· Belarus opted for performance-enhancing reforms in education, health and social protection which are in the right direction;
· Belarus spends more on education and healthcare than the CIS countries;
· Belarus’ poverty monitoring and analysis system has potential to be a “good practice” for the region.

According to the 2005 statistics of the World Health Organisation,

· The percentage of health care expenditures in Belarus, as correlated to GDP, increased from 6-6.1 % in 1998-2000 to 6.4 % in 2002;
· Total expenditures on health care per capita increased from $ 64 in 2000 to $ 93 in 2002;
· Governmental expenditures on health care per capita increased from $ 51 in 2000 to $ 69 in 2002.

According to the UNICEF Report “Social Monitoring 2004”, the Republic of Belarus is a leader in the development of health care and education both in CIS and Central and Eastern European countries. For instance,

· Belarus spends on health care more than many Central and Eastern European and CIS countries – 6.2 % of GDP. Only the Czech Republic enjoys a higher rate;
· Belarus has the lowest rate of child mortality among CIS countries which is 7.8 per 1,000 births (almost equals those of Hungary, Poland, Slovakia, Croatia). The rate of child mortality below 5 years is the lowest in CIS and is 10.9 per 1,000 births;
· Belarus has the lowest mortality rate entailed by natural causes in the age group between 15 and 19 years which is 19.2 per 100,000 people;
· Belarus has the lowest rate of tuberculosis dissemination in CIS: 45 cases in 100,000 people;
· Belarus immunized more people against major diseases than CIS and Baltic countries (diphtheria, whooping cough, tetanus, poliomyelitis, measles, tuberculosis) – from 98.9 % to 99.2 %.
· Belarus spends on education more than many Central and Eastern European and CIS countries – 6.8 % of GDP which is higher only in Latvia (7.1 %);
· Pre-school (69.2 %) and vocational/secondary specialized education (43.8 %) encompassed more people in Belarus than in CIS countries.

According to the UNICEF report "The State of the World's Children 2004", Belarus does a lot to protect and strengthen children’s health. For instance, in terms of the integrated coefficient of child mortality below 5 years (including nourishment, immunization, coverage of school education and medical services, environment), Belarus shares the 125th standing with Ukraine out of 193 countries worldwide, ahead of Russia, Latvia and Romania – 121st standing, Georgia – 101st standing, Moldova – 96th standing, Armenia – 94th standing, Kyrgyzstan – 71st standing, Tajikistan – 62nd standing, Kazakhstan – 61st standing, Turkmenistan – 49th standing, Azerbaijan – 46th standing.

According to the statistics published by the International Electrocommunications Union prior to the World Summit on Information Society, the Digital Access Index showing IT development across the world puts the Republic of Belarus in the 66th position, leaving behind nearly every CIS country (except the Russian Federation).

Belarus tops other CIS countries in terms of housing construction per 1,000 persons: the year 2003 saw 3,028,000 square metres put in service which is 7.7 % higher than in 2002 and is the highest figure for the last 3 years. In terms of housing put into operation per Belarusian resident, Belarus leads other CIS countries: in 2003 the Belarusian population was provided with 22.3 square meters of total living space per capita, the Ukrainian population – with 22 square meters, the Russian population – 20 square meters.

The Republic of Belarus outperforms other CIS countries in terms of average salary growth per month and ranks 3 among the CIS countries in real terms, with only Russia and Kazakhstan ahead. Belarus is the only CIS country that has nearly eliminated salary indebtedness.

As the CIS Inter-State Statistics Committee concludes, based on the outcomes of the year 2003,
· Belarus has the most open economy compared to other CIS countries with the ratio correlating exports and GDP being the highest (slightly less than 60 %). For Russia this figure is 30.8 %, for Kazakhstan - 43 %, for Ukraine - 46 %, and the average figure for the CIS - 33.8 %;
· With 1 % of CIS territory and 3.5 % of CIS population, Belarusian foreign trade in terms of volume is surpassed only by those of Russia and Ukraine;
· Belarus produced more industrial output per capita than any other CIS country sharing the lead with Russia;
· Belarus produced more agricultural output than any other CIS country which is 1.5 times higher than the average figure across the CIS;
· Among CIS countries, Belarus in terms of output per capita is the biggest producer of basic foodstuffs, including meat, milk, milk products, animal oil, potatoes, vegetables, eggs, granulated sugar.

According to the estimate and comparative study of the foreign countries’ military potentials by the Royal United Services Institute for Defence and Security Studies, Belarus became one of the first fifty countries in the world list of military achievements in 2004. In 2001 Belarus ranked 45 in the world in terms of its military potential, in 2002 – 41st standing.

The US State Department’s “International Narcotics Control Strategy Report 2004” positively evaluates the efforts of the Belarusian law-enforcement agencies in combating the spread of drugs. In addition, it says that the ramifications of money laundering are less extensive in Belarus than in a number of developed countries like the US, the UK, Germany, Austria, France, Switzerland, the Netherlands, Italy, Spain and cause less concern than in Russia and Ukraine.

According to the international watchdog “Transparency International”, as per the outcomes of the year 2004, Belarus ranks 74 in 152 countries in terms of the Corruption Perceptions Index. Belarus is the least corrupt country than all CIS countries and many Central and Eastern European countries. For instance, Russia holds the 95th standing, Kazakhstan – 124th standing, Ukraine – 128th standing, Romania – 89th standing, Macedonia – 99th standing, Serbia and Montenegro – 101st standing.

Between 2000 and 2003 inflows and outflows of people in the Republic of Belarus had the following pattern:

	Total number of comers to Belarus	Number of CIS and Baltic comers	Number of other comers	Total number of those living in Belarus	Number of those leaving Belarus for CIS and Baltic states	Number of those leaving Belarus for other countries	Balance of migrations
2000	25943	24229	1714	13812	7418	6394	12131
2001	23355	21824	1531	14270	8296	5974	9085
2002	18939	17518	1421	13378	8592	4786	5561
2003	18146	16629	1517	12986	8348	4638	5160
Total	86383	80200	6183	54446	32654	21792	31937

The above statistics lead to the following conclusions:

1. The inflow of people in the Republic of Belarus, though showing a decline over the past two years, is high enough;
2. In actual fact, the balance of migrations is in surplus. The number of comers always outgrows those who chose to leave Belarus;
3. The balance of migrations between Belarus and CIS and Baltic countries remains to be in surplus and relatively steady.

Belarusian sportsmen and sportswomen contributed immensely to enhance the prestige of the country. The year 2003 saw Belarusian athletes participating in 827 biggest international contests and winning 399 awards with 118 golden, 127 silver and 154 bronze medals included. As far as the total results of the world championships in Olympic disciplines are concerned, Belarus has won as many awards as to gain the 13th ranking out of over 200 countries across the world.