Belarus flag Belarus: Economic and Political Overview

The economic context of Belarus

Economic Indicators

On February 24, 2022, Russia initiated a military conflict on the Ukrainian territory, dragging in Belarus as its ally facilitating the invasion of Ukraine, which profoundly upsets the current political context in these countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

Belarus is undergoing an economic transition, inheriting structural features from the former Soviet bloc. The country heavily relies on Russia, its largest trading partner, and to a lesser extent on Ukraine, whose economic and political situation has negatively influenced Belarus in recent years, particularly following the Russian invasion. Belarus traditionally procures gas and oil at reduced prices from Russia, and much of its growth stems from re-exporting Russian oil at market prices. Despite the growth of the private sector since the end of the Soviet bloc, it remains modest. Large subsidies to state-owned enterprises are unlikely to boost GDP growth in the short term, according to the World Bank. In 2022, Belarus's GDP decreased by 3.7% due to Western sanctions in response to its facilitation of Russia's invasion of Ukraine, leading to elevated inflation, supply-chain disruptions, limited household consumption, and hindered exports. However, according to the national statistical committee Belstat, Belarus's GDP grew 3.9% in 2023 to BYN 261.1 billion at constant prices. Nevertheless, the economy is projected to slow to 1.3% in 2024 and 0.6% in 2025 (IMF) due to persisting supply-side constraints, reduced employment, intricate supply chains, and limited technology access. Export prospects for 2024 appear dim due to anticipated declines in Russian GDP growth and diminishing price advantages in the Russian market, resulting from the Belarusian ruble's strengthening against the Russian ruble (Eurasian Development Bank).

Since the financial crisis in 2011, Belarus's economy has been influenced by significant internal and external imbalances, heavily supported by loans from Russia. Consequently, the economy is vulnerable to external shocks and fluctuations in Russia's economic performance. The debt-to-GDP ratio stood at 44.1% in 2023, up from 41.3% the previous year, and is expected to remain relatively stable, at 44.2% in 2024 and 43.3% in 2025 (IMF). Approximately one-third of the debt is held in foreign currencies, increasing risks associated with the depreciation of the Belarusian ruble. The government budget recorded a deficit of 0.2% of GDP in 2023 and is forecast to turn positive by 0.6% and 1.3% in 2024 and 2025, respectively. After peaking at the beginning of the year, average annual inflation was expected to be 4.7% in 2023 by the IMF, with a probable uptick to 5.7% this year.

Belarus exhibits relatively low levels of poverty and inequality, with a poverty rate of 4.8% according to the latest figures from the World Bank. However, the country faces uneven progress in transitioning to a market economy and democracy, and the current economic and political crisis threatens to increase poverty levels. The unemployment rate stood at 4% last year and is projected to decrease by 0.5 percentage points by 2025, according to the IMF.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 72.8471.8169.0570.8273.44
GDP (Constant Prices, Annual % Change) -4.73.92.41.11.3
GDP per Capita (USD) 7,8937,8207,5587,7908,119
General Government Balance (in % of GDP) -3.9-2.5-2.3-2.7-3.4
General Government Gross Debt (in % of GDP) 41.345.048.647.647.9
Inflation Rate (%) 15.25.06.36.56.0
Unemployment Rate (% of the Labour Force) 3.63.53.02.92.9
Current Account (billions USD) 2.52-0.08-0.33-0.92-1.29
Current Account (in % of GDP) 3.5-0.1-0.5-1.3-1.8

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Belarus possesses several natural resources on its territory, including wood, minerals, small fields of oil and natural gas, granite, limestone, clay, sand, peat, and dolomite. Agriculture accounts for 7.7% of the country's GDP and employs 11% of the working population (World Bank, latest data available). The main agricultural products are beef, pork, poultry, milk, and cereals (including potatoes, vegetables, cucurbits, and seeds). Belarus is the world's third-largest producer of rye and flax fiber. The country is also among the largest exporters of butter, chicken, and cheese globally. Nearly 60% of agricultural production is concentrated in highly subsidized state-owned cooperative farms, inherited from kolkhozes, which formed the basis of the Soviet Union's agricultural policy. Belarusian agriculture heavily depends on the Russian market, to which it exports around 90% of its agricultural products. In 2023, the total agricultural output from all categories of agricultural producers amounted to BYN 33.1 billion, marking a 1.1% increase compared to the previous year when adjusted for comparable prices, according to data from the National Statistics Committee.

Industry contributes 33.2% of the country's GDP and employs around 30% of the active population. As a former country of the USSR, Belarus has a developed but ageing industrial base that is heavily subsidized. The main industries include machine tools, agricultural equipment, fertilizers, petroleum and chemical products, food products (including beverages and tobacco), prefabricated building materials, motor vehicles, textiles, and household goods equipment (such as refrigerators, watches, televisions, and radios). The manufacturing sector alone contributes 24% of the country’s GDP, mainly due to the manufacture of food products and coke and refined petroleum products. According to Belstat, in 2023, the volume of industrial production in current prices stood at BYN 187.3 billion, up by 7.7% compared to one year earlier.

The tertiary sector contributes 48.3% of GDP and has experienced significant growth since the break-up of the USSR, employing 59% of the working population. Key sectors include financial services, information technology, transportation, and tourism. Transport services, accounting for almost 42% of the country's total services exports and more than 50% of the balance of foreign trade in services, make up around 6% of GDP. Commerce is also a crucial economic sector, contributing substantially to the nation's GDP, with its proportion amounting to 9.4% in 2019, ranking second only to manufacturing (latest official government data available).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.1 32.6 59.4
Value Added (in % of GDP) 7.7 33.2 48.3
Value Added (Annual % Change) 4.4 -6.1 -5.4

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
61/100
World Rank:
95
Regional Rank:
43

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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Latest Update: April 2024

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