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Where will war in Ukraine take Belarusian economy?

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The fall of the economy into the abyss has stalled / collage by Ulad Rubanau, Euroradio

In the worst-case scenario, Belarus will lose about 20% of its GDP due to the war in Ukraine. Even under the best-case scenario, prices will rise by about 20% next year.

So far, the consequences of the war in Ukraine have not led to a catastrophe in the Belarusian economy. However, the blow turned out to be strong.

Bank of Ideas experts have told us how entrepreneurs are trying to save the situation, and why the depth of the recession is difficult to predict, but there will be no famine in Belarus.
 

"The bottom is minus 20% of GDP and the financial crisis"

"There has been no collapse, but transport and logistical problems and difficulties with calculations are keenly felt," said Dzmitry Kruk, senior researcher at BEROC (Kyiv).

 

Foreign partners fear that money from Belarus will not reach them and will be frozen / pexels.com

"For the last two months, the key issue has been the restructuring of transport logistics chains. Why did I start with this? In economic terminology, these things generate what's called a supply shock. When some problem affects a firm's behavior as a producer, the consequences of such crises are always much larger".

There are now problems both with the demand for goods and services - because people tend to save money or their incomes shrink- and with supply because of problems at firms. So the economy is facing an even deeper downturn. However, businesses manage to adapt and work, even at great expense, noted Dzmitry Kruk and businessman Aliaksandr Knyrovich.

"Accordingly, the supply shock still exists rather in a frozen state. Thus the economy is in a frozen state. There are still options as to how fast and deep the fall can be," says Dzmitry Kruk.

The worst will happen if transportation and logistics problems continue to grow.

Businesses in Belarus are not used to difficult conditions. Protests in 2008 / Reuters

According to Aliaksandr Knyrovich, many businesses manage to keep balance in the new reality, but the mood is pessimistic.

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