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.

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. In 2024, Belarus saw stronger-than-expected growth (estimated at 4% as per official governmental figures), due to robust consumer spending, rising investment activity, and heightened demand from Russia. Moreover, the government boosted domestic demand through administrative measures and expansionary policies. However, potential GDP remains constrained by sanctions and limited access to advanced technologies, despite efforts to spur investment. With Russia’s economy slowing and monetary policy tightening, Belarus’s overheated economy is expected to decelerate to 1.2% in 2025. Consumption will remain the main growth driver but at a slower pace due to a tight labour market, while investments will contribute positively but face monetary constraints. Net exports may weigh on growth due to market dependence and a challenging external environment (World 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 an estimated 41.4% in 2024, up from 40.7% the previous year, and is expected to remain relatively stable, at 40.3% in 2025 and 40.6% next year (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 BYN 4.8 billion as per the Ministry of Finance. The country’s 2025 budget projects a deficit of BNY 4.5 billion (1.6% of GDP), with revenues of BNY 45.5 billion and expenditures of BNY 50 billion. Average annual inflation stood at 5.7% in 2024, slowing from 5.8% in 2023 and 12.8% the previous year.

Belarus exhibits relatively low levels of poverty and inequality, with a poverty rate of less than 1% in 2024 according to the latest figures from the World Bank (based on the upper-medium income poverty line). 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 3% last year and is projected to decrease by 0.1 percentage points in 2025, according to the IMF. However, in the medium term, inflation, a tight labour market, financial losses in enterprises, and a shift of resources to less productive sectors may reduce the effectiveness of economic stimulus measures.

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