The government of Belarus did not take tough measures in connection with the coronavirus pandemic: there was no lockdown, schools and universities were not closed. It is true that administrative mechanisms were used to stabilize state-owned enterprises, but there was no support from the private sector. What did this lead to? Authors of the study “Laissez-faire” COVID-19: Economic Consequences in Belarus presented their conclusions during an online lecture on October 7.
Has the lack of a lockdown helped the economy?
According to the economist, BEROC expert Lev Lvovsky, in most countries the recession was artificial – the authorities, taking care of the health of the population, introduced restrictive measures. Belarus, on the other hand, is a unique case that allows you to find out what is happening with the economy and people, if the government does not interfere in the economic processes associated with the pandemic. Since March 2020, the authors of the study have been collecting data and conducting opinion polls of the urban population in order to measure the effect and impact of the pandemic and everything connected with it on various sectors of the economy, income and psychological well-being of people.
In Belurasi, the military parade on May 2, 2020 was not canceled, and the guests sat without masks
“Despite the absence of lockdowns and restrictions, Belarus still experienced two economic shocks caused by COVID-19. The first was the shock of population mobility, when people, despite the fact that there were no official restrictions, still tried not to leave their homes at certain periods , which led to a decrease in demand for contact services “, – said Lvovskiy. In addition, according to the expert, Belarus faced a shock of external demand due to the lockdown of the trade partners of Belarus, including the “holiday regime” in Russia.
In turn, the economic director of BEROC Katerina Bornukova notes that the state did intervene in the situation – simply not through quarantine bans, but by other mechanisms, for example, through support of state-owned enterprises. “We see that in the industry people were not so much fired as they were sent on simple, unpaid vacations, this made it possible to maintain employment in the long term,” says Bornukova.
At the same time, according to her, those who worked in the private sector turned out to be more vulnerable, since there are more enterprises in this area that are engaged in tourism, in the restaurant industry, and so on. “It seems to me that this is an important signal: the system of social support, as it is built now, does not cover everyone, and probably something needs to be done about this,” the expert notes.
The decline in Belarus’ GDP is less than in neighboring countries
The main reasons for the loss of income are a decrease in salaries, a decrease in the number of working days, unpaid vacations, and the cancellation of bonuses. According to the study, in industrial enterprises that received state support, people complained least of all about the decrease in their income. As well as those employed in agriculture, finance or construction.
The Brest – Warsaw highway during the pandemic: there was no lockdown, but many preferred to stay at home.
“We see that at the very beginning of the pandemic, people who work in the hospitality and retail industry suffered the most. Next comes the transport industry: due to the fact that Russia and European countries were closed, there was less traffic,” says Lev Lvovsky.
Although many people in Belarus complained about the decrease in their income, in terms of macroeconomic level, the decline in Belarus’ GDP during the pandemic was much smaller than in neighboring countries. “The mechanics itself is interesting. Due to the fact that, apparently, people’s incomes decreased at different times, the negative effects overlapped,” comments Lev Lvovsky.
Women suffered more than men
In addition, the authors of the study noted, the shock of mobility had negative economic consequences mainly for women, and the export shock, on the contrary, for men. This can be explained by sectoral differences in the employment of people.
Experts were able to identify gender differences in the effects of coronavirus only in people with children. This is due to the decision not to take them to school or kindergarten during the pandemic. In this group, women suffered more from declining incomes than men. They were also more susceptible to depression associated with loss of income.
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