BELARUS NEWS AND ANALYSIS

DATE:

14/08/2009

Belarus - Services industry accounts for 43.2% of Belarus' GDP in H1

In H1 2009 the services industry accounted for 43.2% of GDP as against 38.7% in the same period last year, Economy Minister Nikolai Zaichenko said during a session of the Presidium of the Council of Ministers on 4 August.

Yet, the GDP share of services fells short of the 2009 projection of 44-45%. This failure was due to objective and subjective reasons, the minister said. The objective reasons include the current economic situation and slow business activity. Low industry growth and lack of financial resources in the production and non-production areas have affected the services industry too. Another factor is falling real incomes of people.

The export of services has increased more than two times for the past three years. The volume of communications services provided by legal entities and natural persons has increased 1,7 times (the growth projection was 1,4 times), banking services 2,4 times (1,4-1,5 times), paid services 1,4 times (1,3 times). As a result, certain groundwork has been laid to meet the five-year projections approved by the social and economic development programme for 2006-2010.

"The comprehensive programme is a locomotive for the industry-specific programmes," Nikolai Zaichenko said. There is growth across several industry-specific programmes, but for the transport industry. Thus, the civil aviation development programme for 2006-2010 envisages nine indicators. Only six of them are being implemented. Sea transportation by Belarusian residents in January-June account only for 24.6% of the plan set in the internal water and sea transport development programme by 2010. The lowest results, below the 2008 level, were registered by the motorway cargo transportation industry - 94.6%. Railway services also reduced to 87.1%, paid services provided by hotels fell to 98.4%.

According to the minister, "the performance of the sports, tourism and recuperation industries as well as of the Housing and Utilities Ministry is unsatisfactory". Nikolai Zaichenko criticized the companies of the Transport Ministry, the Housing and Utilities Ministry, the Republican Centre for Recuperation and Sanatorium Treatment.

In January-May 2009 the export of services account for 77.4% of the export in the same period in 2008 (as against the annual growth projection of 20%). A trade surplus in services made up 0.9 million, 7.6 million down as compared with January-May 2008.

The export reduced across almost all types of services, except communication, insurance services and services provided in the cultural and recuperation sector.

In terms of GDP formation, services can be divided into two big groups: commercial and budget services. Commercial services account for 57% of all the services, budget services for 43%. In H1 2009, the highest growth rates of commercial services were registered in banking operations (up 37.9% as against January-June 2008), real estate operations (20.5%), communications (19%), trade and public catering (2%).

The growth in budget services was lower: health care services were up by 0.6%, education by 0.8%, housing services 0.9%, public utilities account for 98.4% as against the same period last year.

Nikolai Zaichenko has made the proposals concerning the development of the services industry. According to him, the state should take additional measures to protect domestic road carriers. It is necessary to seek new markets to export transport services, avoid the reduction in the number of Russian transit permissions for Belarusian road carriers, he said. He also noted that there is a need to intensify the construction of transport and logistics centres including in Brest.

According to Nikolai Zaichenko, there is a need to renovate main assets of the Belarusian Railways including freight rolling stocks, modernize the railways infrastructure. These measures will help the country increase the speed of passengers and cargo movement and make this kind of transport more attractive in comparison with others.

"We need an aggressive marketing policy to attract additional container transportations," the minister underscored. According to him, there is a need to continue working on attracting foreign investments into renovation of the national highways including development of international transport corridors and road service.

Source:

http://www.isria.com/pages/13_August_2009_140.php

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