Banks Will Fall If Belarusians Decide to Withdraw Their Savings from Deposits 5
13:08 11.01.2019 — Economics
The Belarusian economy is experiencing rapid inflation acceleration.
The National Bank reports that the population actively transfers savings to long-term deposits. Savings are also held in currency. The growth of long-term assets is noticeable: more than 65%. But there are other alarming trends for the authorities.
Capital injections into incomes of the population are the most dangerous for the banking system, select.by writes. If the labour capacity increased by 4.1% for the first 9 months of last year, real wages for the same period increased by 12.2%, real incomes - by 7.8%.
In October the situation turned even tenser. The government initiated wage growth, while GDP dynamics slowed down significantly. Decline in oil prices added fuel to the fire. Not everything is known about consequences of the tax maneuver.
As a result, the Belarusian economy is experiencing rapid inflation acceleration. Core inflation rose from 2.5% to 4.1%, while trend inflation - from 2.8% to 3.9%. The acceleration of price growth will continue in early 2019. Inflation expectations of citizens are increasing.
Belarusians have always turned to foreign currency to save their savings during volatile situations. In 2015-2016 foreign-currency deposit rates were relatively high, while Belarusians had almost no free rubles to exchange. Therefore, the amount of foreign currency of the population fluctuated between $400-500 million. But from the beginning of 2018 the amount of hot money on cards exceeded 700 million dollars, and in November it reached almost a billion dollars. Belarusians keep their savings "as a protective measure". But the population can quickly convert this money into cash and demand banks to return it. It is clear that such a huge outflow of foreign currency will be a disastrous event both for the National Bank and commercial banks.