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, especially following the Russian invasion. 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 growth 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 2022 the country’s GDP decreased by 7% following the sanctions imposed by Western countries in light of the country’s facilitation of Russia’s invasion of Ukraine, which contributed to elevated inflation and supply-chain disruptions that limited household consumption and hindered exports. Stagnating real wage growth and narrowing household savings are expected to restrain private consumption in 2023, with the IMF forecasting a sluggish GDP growth (0.2%), although Fitch Ratings has a more negative outlook (-1.5%).

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 fluctuations in Russia's economic performance. Concerning public finances, after increasing following the outbreak of the COVID-19 pandemic, the debt-to-GDP ratio started declining in the last couple of years and stood at 35% in 2022. The ratio is expected to follow a downward trend over the forecast horizon, at 34.3% this year and 33.1% in 2024 (IMF). 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. Furthermore, in April 2022, the EBRD’s Board of Governors decided to suspend access to the Bank’s resources by Belarus. The government budget in 2022 recorded a deficit of 2.9% of GDP and is forecast to decrease to -0.6% in 2023, before turning positive by 0.1% the following year. Inflation spiked in 2022, reaching 16.5%, although it started slowing since August. In an effort to achieve the goals set for the government and the National Bank to keep inflation at 7-8%, a clear pricing mechanism has been established for manufacturers, importers and retailers; while the National Bank reduced the refinancing rate from 12% to 11.5% per annum in January 2023. The IMF expects the inflation rate to gradually decrease over the forecast horizon, to 13.1% this year and 11.7% in 2024.

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 (the region of Mahiliou being the poorest). In 2022, the GDP per capita (PPP) was estimated at USD 21,709 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. While still low, unemployment rose to 4.5% in 2022 and is expected to gradually decrease to 4.3% in 2023 and 3.9% in 2024 (IMF).

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