Belarus risks undermining economic stability by raising wages before elections, HSBC Holdings Plc (HSBA) said.
Wage indexation threatens to widen the current-account gap, as a result of which the ruble may need to depreciate to 9,500 per dollar by year-end from 8,350 at end-2011, HSBC wrote today in an e-mailed report. The economy may grow 3 percent this year before slowing in 2013 as competitiveness falls and imports increase, according to the report.
“Our initial hopes for the authorities’ attempt to achieve subdued economic growth and curb inflation in 2012 have been disappointed,” HSBC wrote.
Belarus is recovering after a balance-of-payments crisis last year that caused inflation to soar to 108.7 percent as the ruble depreciated 64 percent against the dollar. Voters in the former Soviet republic will elect a new parliament in September.
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