General economic conditions for the consumer market development

А rather difficult socio-economic situation has directly affected the development of the consumer market of Belarus. For the Belarusian economy, 2015 was the year of significant reduction of the GDP and deterioration of most socio-economic indicators.
In comparison with 2014, the GDP decreased by 3.9%. Negative GDP growth has been seen in the country for the first time in the last 19 years, since 1995. A significant decline has been noted in the industrial sector (6.6%), in agriculture (2.8%), in construction industry (9.5%) and in other kinds of economical activities. Household real money income decreased by 5.9%.
The reduction of household real money income took place against the backdrop of the country’s population growth. The population of Belarus increased by 17.9 thousand people in 2015 and reached 9 498.7 thousand people by the beginning of 2016. Population growth in 2015, as well as in the two previous years, was provided by the migration gain which completely compensated the natural population decline and provided its growth.

Major trends in the consumer market development

The contraction of the consumer market. The contraction i.e. the decrease in the consumer market naturally followed after the decrease in household real money income. Retail turnover through all channels of sales and public catering in 2015 amounted to 363 154.8 billion rubles or 99.8% of the 2014 level. The reduction of retail trade turnover was far behind the rate of household real income decline, indicating the expenditure of population’s money savings.
Due to high devaluation rate of the Belarusian ruble to the US dollar, the turnover of retail trade and catering decreased in 2015 by 35.7% in comparison with 2014 and amounted to 22 890.9 million US dollars.
In Belarus, in 2015, the average consumer spending per capita (excluding paid services) amounted to 38 267.7 thousand rubles and decreased (in comparable prices) by 0.3% in comparison with 2014. In the US dollars, the average consumer spending per capita decreased by 35.8% in Belarus, from 2 412.1 US dollars in 2014 down to 1 346.9 US dollars in 2015.
The growth of the retail trade share in the consumer market structure and the decline in the share of public catering. In 2015, а bright tendency of the consumer market development in Belarus was a significant change of the retail turnover structure. The growth rate of retail trade turnover was 100.2% in 2015 in comparison with the previous year. The public catering turnover amounted to 92% of the 2014 level. A significant reduction in public catering turnover was the result of transition to a model of saving on eating out by the population. As a result, the share of retail trade in the structure of retail trade turnover increased to 95.6%, while the share of public catering decreased to 4.4%. It has to be noted that even before the economical recession, the share of public catering in the retail turnover structure was extremely low (4.7 % in 2014), indicating the low standard of living in the country in comparison with most of the other European countries.
The reduction of retail trade turnover in markets and shopping centers. Amid the general slowdown in the growth of the volume of the retail trade turnover, in 2015, trade organizations “were feeling themselves” much better (they provided a turnover increase by 5.4%). The shopping centers and the markets were in a significantly worse condition (turnover decline by 2.5%).
Turnover decline in the markets and shopping centers was related considerably to the deterioration in terms of trading activity of individual entrepreneurs due to the necessity, from 1 January 2016, to sell only certified products according to the Edict of the President of the Republic of Belarus No. 285 “On Some Measures to Regulate the Entrepreneurial Activity” dated 18 June 2005. Meanwhile, Belarusian individual entrepreneurs have some difficulties in getting shipping documents in the wholesale markets of other countries. Fearing of penalties and the inability to sell non-certified products in 2016, many individual entrepreneurs consistently terminated their trading activities.
Changes in the commodity structure of the consumer market. In the commodity structure of the retail trade and public catering turnover in 2015, a share of food products notably grew up to 52% and the share of non-food products reduced to 48%. This tendency is related to the significant decrease in living standards of the Belarusian population. In 1995, the hardest year in the socio-economic development of modern Belarus, when there was a peak of post-Soviet social and economic crisis, the share of food commodities in the retail trade and public catering turnover structure was equal to 65.5%. In the pre-crisis year of 1990, the share of food commodities in the structure of retail trade and public catering turnover in Belarus amounted to 44.9%. It was the lowest percentage of food commodities in retail turnover for the last 25 years. The share of food commodities in the retail turnover, in many experts’ opinion, is the most reliable indicator of living standards.
The growth of interregional differences in the purchasing power of the population and the concentration of the consumer market in the major urban centers of the country. The difference between the average consumer spending per capita in the regions of the country in 2015 reached a threefold value (Minsk District and Minsk vs. Gorodok District in Vitebsk Region), the share of Minsk in the capacity of the consumer market of the country (excluding paid services provided to the population) exceeded 30.8% of the national level. Due to the population growth and traditionally relatively high average consumer spending per capita in large urban centers, the share of those centers in the capacity of the consumer market of the territorial settlement systems they lead, which can be viewed as regional consumer markets historically developed in Belarus, is constantly growing. Each regional consumer market consists of major urban centers and surrounding areas closely interacting with each other.
More information on the development of retail trade, public catering, interregional differentiation in consumer expenditures, the capacity of the consumer market and the condition of the regional consumer markets of Belarus can be found in the appropriate Analytics section on the website.