Belarus grows while Ukraine withers

Following the collapse of the Soviet Union, Belarus, Ukraine and Russia were all on the same trend of collapsing GDP and energy consumption (Figure 1). Belarus has no indigenous energy supplies, at least BP do not bother reporting production data, and must therefore import most energy from Russia. Since the mid 1990s the Belarusian economy recovered, showing strong annual growth and is now on a par with Turkey.

This is a very different story to Ukraine where the economy, that was showing feeble growth, collapsed again in 2009 and has not yet recovered. Economic malaise will no doubt underpin the civil unrest in Ukraine. EU and Russian leaders would do well to understand and try to fix the root causes for economic stagnation and to set aside the sabre rattling. The 2009 collapse took place on Prime Minister Yulia Tymoshenko’s watch. She was subsequently imprisoned, recently released, she is now a candidate in next month’s Presidential election.

Figure 1 The trends on this chart all represent a time series where 1990 is to the right. Following the collapse of the Soviet Union Gross National Income (GNI) and energy consumption in Russia, Ukraine and Belarus all collapsed along a similar trend, heading towards zero. In the mid 1990s each of these economies began to recover along much more energy efficient trends. Recovery in Ukraine was much weaker than in Russia and Belarus and the economy collapsed again in 2009 (the Ukraine point farthest to the left) and has shown only weak recovery since. Data from BP [1] and the World Bank [2].

Belarus is much smaller than Ukraine with a population of only 9.4 million and borders Russia, Ukraine, Poland and the Baltic States. Unlike Ukraine, that has had a highly turbulent series of elections, putsches and presidents, Belarus has had only a single elected president, Alexander Lukashenko, since declaring independence in 1991. Belarus is allied to Russia and is run along similar autocratic lines. Stable, but not totally democratic.

The trouble in Ukraine is rooted to the fact that half the country wants to face west and to become a part of the EU and NATO whilst the other half wants to face east and ally itself with Russia. The current democratic model is bound to fail in these circumstances.


BP do not report any oil, gas or coal production data for Belarus and so it is safe to assume that any production is negligible. Nor do they report any nuclear or hydro consumption, suggesting that Belarus is devoid of significant primary energy production. Given the comparative success of the economy, this once again underlines the fact that indigenous energy is not necessary for economic success. But access to stable, secure and affordable energy is.

Figure 2 In line with all former Soviet states, energy consumption collapsed with the fall of the union. Prior to the 1990s, the economy was heavily orientated towards oil with lesser amounts of gas and coal consumed. Since the mid 1990s, Belarusian energy consumption has been transformed to using more gas and less oil. Coal consumption has been phased out and there is now a tiny amount of renewable production and consumption. Energy consumption is now growing slowly in line with the economy while the population falls.

Population and Economy

Figure 3 Belarus covers a large territory but has a small population of 9.4 million that has been falling slowly since independence. GDP in free fall from 1990 has recovered strongly on the back of market reforms along a more energy efficient trajectory (Figure 1 and 8).

Figure 4 In the past decade, Belarus has seen a major expansion in bilateral trade, I suspect mainly with Russia and other neighbouring states. A sharp drift into the red during the global economic crash has since been rectified.

Energy and economy

Figure 5 The fall and rise of GDP and energy consumption, cross plotted in Figure 6.

Figure 6 In 1990, at the end of the Soviet era, Belarus had extraordinary high per capita energy consumption for a poor country. Producing only $624 per tonne equivalent of oil consumed, Belarusians were failing to add any value from that consumption. Belarus evidently clings to many Soviet era state controls of industry, but market reforms have sent the country upon a much more efficient and productive path. Note this chart plots inflation adjusted data, chained to $US 2005 [3]. Figure 1 plots purchasing power parity (PPP) in international $ (current) that is intended to remove economic distortions brought about by arbitrary exchange rates.

Figures 7 and 8 show the Belarusian per capita GDP v energy cross plotted with the other countries in this series of posts [4 to 10]. Figure 7 is the version of this plot I have been using that employs chained $US 2005 published by the UN [3]. Figure 8 employs gross national income data published by the world bank (WB) [2] in current international $ that is deemed to provide a more realistic picture of actual national wealth and prosperity.

Figure 7 Per capita GDP and energy consumption with the former in chained $US 2005. This removes the effect of inflation but leaves distortions from exchange rate and other national variances.

Figure 8 Per capita GNI and energy consumption in current international $. I am unsure if the effects of inflation are removed. The WB data begins in 1980 while the UN GDP data begins in 1970, hence the GNI time series are shorter.

Employing the GNI PPP data creates an interesting picture that is beginning to emerge. The baseline defined by the decline of Soviet economies, passing through Egypt (early years) and the origin – no energy, no money – may characterise Zombie economies that produce little for the energy consumed. It is striking how market reforms in Russia and Belarus have transformed the efficiency of these economies. I wonder if the citizens feel materially more prosperous? The Ukrainian Death Spiral [9] has left that economy in a zombie state.

The islamic economies of Egypt, Algeria and Turkey are all superimposed on the same trend that is actually extremely energy efficient. Modern Turkey produces near $20,000 using 1.6 toe per capita while Russia used 4.7 toe to produce the same output.

The “post industrial” UK is of course anomalous for showing no correlation between energy consumed and GDP, for reasons discussed in reference [10]. But it is interesting to observe that phantom GDP went up in smoke during the crash but that this was accompanied by a fall in energy consumption. GDP growth has been achieved without energy growth but GDP decline is accompanied by energy decline. The role of high energy prices and energy scarcity in catalysing the 2008 crash is a question that remains unanswered.

[1] BP: Statistical Review of World Energy 2013
[2] World Bank Data Indicators
[3] UN: National Accounts Main Aggregates Database
[4] Egypt – energy, population and economy
[5] Russian Power
[6] Post-peak Algeria?
[7] Libya – energy, population and economy
[8] Turkey – on its way to a mature economy
[9] Ukrainian Death Spiral
[10] Does the UK Economy Run on Energy or Hot Air?

Footnote: Energy Matters passed through 100,000 page views today 🙂

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14 Responses to Belarus grows while Ukraine withers

  1. Oldfarmermac says:

    I am a firm believer in the power of Adam Smith’s Invisible Hand when it has time and opportunity to work it’s magic.

    But it can work only so fast and it has to have something to work with.

    Given the example of Turkey for instance I am almost ready to give up being an energy doomer.

    The question that interests me most at this time is whether the countries that are becoming more energy efficient fastest will be able to maintain the pace as depletion and rising fossil fuel prices continue to put pressure on their economies.

    My personal gut feeling is that natural gas and oil will both double in price within a decade in constant money.

    It seems extremely unlikely that energy efficiency in a country that is already highly efficient can improve that fast.

    If I am right about this then even countries such as Turkey are going to be in a world of hurt before too much longer.

    A country such as the United States may or may not wind up in such dire straits. I think we are going to have an enormous problem with unemployment in many kind of businesses that are dependent on cheap energy and that this unemployment will create some nasty feedback loops that will wreck the economy in terms of business as usual.

    But a wrecked ” business as usual ” economy doesn’t necessarily mean people must starve or freeze to death in the US. We are rich enough to prevent that sort of thing.

    I am not so sure about countries that must import all or nearly all of their energy.

    There is a time coming when energy in the form of coal and oil and natural gas is going to cross national borders only if there is a ship or train going the other way loaded with something badly needed such as food or iron ore or lumber.

    The business of making a living in international trade thru tourism and manufacturing throw away consumer goods has almost certainly already seen its best days.

    • Euan Mearns says:

      Mac, Adam Smith’s invisible hand…. I agree that energy prices will rise but perhaps to $150 / bbl in a decade. They cannot rise faster than we are able to adapt, but need to rise to bring on more expensive, difficult to get at reserves. But the word “we” is very broad. I see a continued polarisation where the haves are not much bothered by energy prices and the have nots cannot afford anything.

      The bigger picture is also very complex. You are correct to say that inefficient economies have more scope to make savings. Turkey I believe has grown upon a mountain of debt – no such thing as a free lunch. Individuals adapt easily to more and less easily to less.

  2. Hi Euan,

    Congratulations on 100,000 page views!

    All interesting charts. It may just be that Belarus is so strongly tied to Russia economically that it will follow the Russian path, albeit at a lower per-capita GDP.


  3. Roger Andrews says:

    Here’s a comparison of per capita GDP growth (World Bank data) in Ukraine, Belarus and Russia since 1990. As Dave Rutledge notes Belarus is indeed following the Russian path, but Ukraine is lagging:

    Would Ukraine do better by integrating its economy with the Russian economy rather than with the EU?

  4. Syndroma says:

    >Belarus has no indigenous energy supplies
    Right now Russia builds the first Belarusian nuclear power plant with two 1GW reactors. Plans are for it to go online in 2018.

    >I wonder if the citizens feel materially more prosperous?
    I think this chart says it all:
    There is an ongoing boom of consumerism. Especially outside of Moscow. Moscow had its boom in early 2000s, now its retail grew only 1.7% in 2012, while average Russian retail volume growth was 6.3%

    • Euan Mearns says:

      So citizens have money in their pocket and there are goods to buy in the shops. Do you have iPhones and iPads? Russia was also in the frame to build new reactors in the UK – would be interesting to see how that pans out. At the moment we are calling on our new best friends, the Chinese, to help out.

      • Syndroma says:

        >Do you have iPhones and iPads?
        Too many for my liking. Especially among kids in big cities. Parents are overcompensating for the grim childhood in the 90s. Now the kids take everything for granted and spend most of their free time on

        Also malls, malls everywhere. And don’t get me started on realty market.

        There is an inside joke that the only global competitor of Gazprom is Rosatom. Just a couple of days ago they signed a binding agreement to finance the new NPP in Finland.

        • Euan Mearns says:

          Its good if the kids are getting some prosperity. Prosperity is worth holding on to. But you gotta be careful that society doesn’t get too soft. I lived in Norway for 8 years, 83 to 91, one of my best mates in Norwegian. Tells me that for all their wealth, many Norwegians are miserable. Huge % off permanently sick, living on benefits.

          The virtual society… last year I spent a few days in Rome with my wife. We discovered the Pantheon Square, a sublime place to enjoy a bottle of red wine. We sat and watched one group of tourists after another being led in there, all of them holding iPhones, Samsung Galaxies or iPads in front of them videoing while they went. None of them actually looked at where they were, viewing the world through a digital lens, doubt many will ever watch what they filmed, the stuff they never saw.

          Anyway, enough of the easter BS philosophy 😉 We have had 100% blue skies here today, temps topping out at about 17˚C, I’m on wifi looking out across the fields to the hills. Life is good today.

          • Syndroma says:

            I’m looking out of my window and still see some snow. Oh well, at least it’s melting. At least I’m not on Yamal peninsula drilling for gas during 9 months of winter.

          • Euan Mearns says:

            Awesome pics. And it turns into a fly infested bog in Summer? It seems like we are doing all we can to disrupt you banking system in order to prevent further investment in “our” energy infrastructure.

          • Syndroma says:

            Check out the railway that supplies that gas field:
            Yes, in summer it turns into a mosquito hell. Also a lot of roads become unpassable. It’s particularly a problem in Salekhard
            That town has a railway station on the opposite (west) side of Ob river. It connects by ice roads in winter and ferry in summer. But in spring and autumn the town is cut off from supplies. Building a bridge is financially impossible for now, so a road from the southeast is being built.

            It always fascinates me how inhospitable that place is.

            Meanwhile Putin’s approval rating in Russia reaches record 71%. Whatever Putin does, Russians are ready to share responsibility.

          • Euan Mearns says:

            So which field / fields is all this servicing? Bovanenko? A few years ago I recall reading about the problems building railways here, ice hard in winter, bog in summer. And the floods caused by spring coming in the S with melt water flowing N to where it was still winter.

            Folks in the UK and in fact through most of Europe have no clue about the scale of effort required to get the energy that has created their prosperity. In the UK, its all off shore, folks in Aberdeen have some idea about the effort involved, but else where the oil and gas industry is now viewed as polluting and profiteering. The Green solution is to build lots of windmills, if we’re lucky have enough electricity to make coffee every now and then.

          • Syndroma says:

            Yes, Bovanenkovo. And a as a whole.
            Also of interest is They build a sea port for it at 71N.
            In a related news: Atomflot plans to discontinue tourist voyages to the North Pole on Russian nuclear icebreakers, because of the shortage of icebreakers to service all of the Arctic projects.

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