Economic Outline

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.

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Belarus is an economy in transition, with structural features inherited from the former Soviet bloc. The country is heavily dependent on Russia, which is by far its largest trading partner, and to a lesser extent on Ukraine, whose economic and political situation has exerted a negative influence on the Belarusian economy in recent years. Belarus has traditionally bought gas and oil at a reduced price from Russia and its growth is largely due to the re-export of Russian oil at market prices. Since the end of the Soviet bloc, the growing of the private sector has been modest. The large subsidies granted to state-owned enterprises will no longer, in the short term, be able to increase GDP growth, according to the World Bank. Figures from the IMF show that in 2021 the country’s GDP grew an estimated 2.1%, thanks to the normalization of trade relations with Russia and rising global market prices for hydrocarbons. For 2022, the IMF forecasts a sluggish growth of 0.5%, followed by 1% the following year, curbed by chronic structural problems and the negative effect of Western sanctions.

Since the financial crisis in 2011, Belarus' economy is still influenced by significant internal and external imbalances and is strongly supported by loans from Russia. The economy is therefore very vulnerable to external shocks and suffers from the consequences of the fall of the Russian currency. The country is also dependent on Ukraine and has to deal with the volatility of this market, especially after the diplomatic and military tensions with Russia in early 2022. Concerning public finances, after increasing following the outbreak of the COVID-19 pandemic, the debt-to-GDP ratio started declining in 2021, when it stood at 44.9%. The ratio is expected to follow a downward trend over the forecast horizon, at 44.7% this year and 40.3% in 2023. One of the problems with the debt is that about one-third of it is held in foreign currencies, increasing the risks associated with the depreciation of the Belarusian ruble. The government budget in 2021 recorded a deficit of 3.8% of GDP, and is forecast to decrease to 2.1% for 2022, before turning positive by 0.3% the following year. External inflationary pressures and a loose policy stance triggered contributed to high levels of inflation in 2021: the average annual rate stood at 9.2%, with a forecast of 8.3% and 6.1% in 2022 and 2023, respectively (IMF).

Belarus has relatively low levels of poverty and inequality, with a poverty rate of 4.8% according to the latest figures from the World Bank (though the BEROC Economic Research Center estimated that 21.5% of the total population is living below the poverty line, with the region of Mahiliou particularly being the poorest). In 2021, the GDP per capita (PPP) was estimated at USD 20,578 by the IMF. However, the country suffers from uneven progress in its transition to a market economy and democracy, and the current economic and political crisis threatens to increase the proportion of poor people. Unemployment rose to 4.3% in 2021 and is expected to increase gradually to 4.2% in 2022 and 4% in 2023 (IMF).

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