Economic weakening only does so much to hurt authoritarian rulers like Aleksander Lukashenko, who retains Moscow’s backing. But time is not on his side as state coffers run low, investment freezes and the currency tanks.
The Belarusian economy is set to fall by 2% this year, a relatively strong figure given the effects of the COVID-19 pandemic and the country’s dependence on a low price of oil. But experts expect the start of 2021 to see the real economic impact of the ongoing anti-government protests witnessed in frozen investments, a slumping exchange rate, a possible debt default and empty state coffers.
“The authoritarian system has already been only a few steps away from its collapse,” says Pavel Slunkin from the European Council on Foreign Relations (ECFR). “However, the authorities managed to cope with the first wave of public discontent and survived through a combination of violence, threats and layoffs,” he told DW.
Workers have been intimidated with criminal cases for illegal strikes, he adds, which would pose “a huge threat to the system’s solidity, as the proletariat has always been considered the social base for the authorities.”
Workers at the Minsk Wheel Tractor Plant staged a walkout in August to show that they are no longer backing Lukashenko
Factories and IT the key
Opposition co-leader Sviatlana Tsikhanouskaya called for a general strike on October 26. But the picture on the ground is mixed, as Lukashenko plays a divide-and-conquer game, effectively buying off selected workers and factories. Authorities have also focused on thwarting opposition efforts to engineer strikes at state-owned factories by arresting strike organizers and threatening workers with dismissal.
Via state media, the government downplayed the impact of strike calls, with Industry Minister Piotr Parkhomchik claiming on state television in October that they “have not resulted in economic damage.”
The country’s largest factories generated $10 billion (€9 billion) in revenues last year as well as $7 billion in export proceeds and 12% of total budget revenues in 2019.
But the situation could be changing. Strikes have been reported at a number of the large state-owned industrial plants that are the backbone of the economy.
ECFR’s Pavel Slunkin points to the fact that recently strikes were also announced by the employees of industrial giants such as MTZ and BelAZ, who had previously been considered the undisputed electoral base of the government. Alexander Yaroshuk, president of the Belarusian Congress of Democratic Trade Unions (BKDP), told DW that strikes are now also taking place at OJSC Belaruskali, a producer of potash fertilizer and OJSC Grodno Azot, a nitrogen producer.
“It should be borne in mind that for more than a quarter of a century Belarusian workers have been held in the grip of a dictatorial regime and political strikes are prohibited,” Yaroshuk said. “But even in these circumstances, the number of those who responded to Tikhanovskaya’s call and gone on strike, is very significant.”
Another crucial part of the Belarusian economy is high-tech. In August, 500 representatives of the sector signed an open letter casting doubt on official election results, demanding the release of political prisoners and an end to violence and detentions of protesters. Some threatened to relocate to neighboring Poland, Ukraine, Latvia and Lithuania.
High-tech companies like Semiconductor Devices Factory in Minsk contribute around 5% to the Belarusian GDP
Heavy costs
The protests have already cost an estimated $500 million for the Belarusian economy worth a total of about $60 billion. The country only has $9 billion of reserves, equivalent to 2.5 months of imports.
International credit ratings agency Fitch Ratings last week downgraded its outlook on the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to negative from stable, following a similar move by agency Standard & Poor’s.
To survive, devaluation of the Belarusian rubel might be needed. The currency has already fallen 30% against the euro since the beginning of the year due to an energy row with Russia. The government spent $1.5 billion in hard currency reserves to shore up the Belarusian ruble in August and September.
Most people measure the impact of the political instability in terms of the national currency, but this is not the only way, said economists during an online conference organised by the Press Club Belarus. Lev Lvovsky, a researcher at the BEROC economic research center in Minsk, told the participants that “if you want to catch a duck, you need to think like a duck.”
“That means we need to think like business people and many of them are running out of confidence in the authorities,” he said, adding that in the key state sector of manufacturing companies were already “sending output into warehouses,” meaning a large part of GDP, about 2.5%, was “not creating value.”
Russia holds the cards
Belarus’ governmentwill have to find $3 billion to finance its international obligations this year. According to the Finance Ministry, the public sector is due to repay between $2.5 billion and $3 billion of external debt every year for the next five years, while the outstanding debt to Russia alone stands at $8 billion.
But the ongoing protests have further isolated Minsk from international capital markets, so the Russia-led Eurasian Fund for Stabilization and Development (EFSD) is the main source of foreign credit. Russia holds about 38% of its neighbor’s national debt and last year took in 40% of its exports totaling $32 billion.
Fitch Ratings expects though the domestic political crisis won’t impact the country’s relations with Russia and China; its main external creditors accounting for 72% of the government’s external debt.
Some economists expressed the fear that Russia might buy up struggling state-owned firms in Belarus and turn their senior-level executives into de facto political lobbyists for Moscow.
Without the backing of Russian President Vladimir Putin (left), Lukashenko wouldn’t be able to cling to power
The end of an era
Katsiaryna Shmatsina from the Minsk-based Belarusian Institute for Strategic Studies (BISS) is convinced the authoritarian system of president Lukashenko system is “exhausting its resources.”
“According to insiders, the siloviki [people of power] are physically tired of those weekly demonstrations; there is a seed of distrust among the vertical power structure regarding loyalty to Lukashenko,” she told DW.
Shmatsina thinks the Belarusian strongman is unlikely to stay in power for the whole presidential term, given the scale of protests. His balancing act between the West on the one hand, and Russia and China on the other made sense in previous years and under different circumstances, she argues. “But now the question is about making him leave and holding those complicit of torture accountable.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
