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Economics

11.09.2009

Investment as Growth Factor

Investments are one of the effective tools used by the government for priming of economy. Thus, it seems especially timely to use them during a recession when national economies require additional support. Therefore, despite economic crisis Belarus continues investing in real economy. As is reported by Deputy Minister of Economy of Belarus Tatiana Starchenko, "in January-July 2009 investments in real economy increased by 17.8% as against January-July 2008. BR 23 trillion was invested". Tatiana Starchenko also noted that 25 investment projects in different sectors were completed in the first half-year 2009.


Investments are one of the effective tools used by the government for priming of economy. Thus, it seems especially timely to use them during a recession when national economies require additional support. Therefore, despite economic crisis Belarus continues investing in real economy. As is reported by Deputy Minister of Economy of Belarus Tatiana Starchenko, "in January-July 2009 investments in real economy increased by 17.8% as against January-July 2008. BR 23 trillion was invested". Tatiana Starchenko also noted that 25 investment projects in different sectors were completed in the first half-year 2009.

If to consider the inflow of investments in relation to sectors of economy, then one can observe that most of investments were attracted into manufacturing entities - 20.3%. As concerns non-manufacturing sectors, here the inflow made up 15.2%. More than 20% of all investments go to house building. So far 54.3% (3.2 million square meters) of this year's work quota on house building has been fulfilled which is 12.4% more as compared with the same period last year. And one third of the housing built is located in rural areas.

There is no doubt that investing is an essential and effective instrument of economic stimulation. However, more than often the means available are insufficient to invest all promising projects. In this case attraction of foreign investments becomes a way out. It should be noted that investors believe Belarus' economy is a steadily developing one which is confirmed by the inflow of foreign investments in real sector of economy. In the first half-year foreign representatives invested $4.2 billion in different sectors of economy which is 27% more as compared with the same period last year. Russia remains a leader in the amount of investments in Belarus' economy. Its share makes up 2/3 of all foreign investments or about $2.8 billion.

It should be observed that foreign investors prioritize such sectors of Belarus' economy as transport, industry and trade. For instance, 45% of foreign money was invested in the transport system of the country, while 26% - in industry.

A plus point here is the fact that 60% of all foreign investments (about $2.5 billion) are direct investments that is investments in existing or start-up joint ventures as well as investments in form of loans and credits for production development. As was noted by First Deputy Minister of Economy Piotr Zhabko, this number is twice as much as compared with the same period last year. All other foreign investments (credits, loans, financial leasing) amounted to $ 1.7 billion.

The numbers given make it evident that in spite of the recession Belarus' economy still has some growth potential. Increase of foreign investments makes it more than obvious. It is well-known that money likes peace and stability and there are few people who would like to invest in commercially unviable and unstable economy. Another reason for this positive tendency in investing is a number of government decrees aimed at economy liberalization, improvement of business environment and simplification of tax system. At the same time, one should remember that this financial year has not finished yet and that final results of government efforts aimed at priming of economy including by attracting investments can be evaluated only in January 2010.

Dmitri Vukovich