ANALYSIS: Belarus’ economy slowing growth pace, inflation accelerating

Monthly overview of Belarus’ real economy sector, Jan-Sep 2021 MINSK, Sep 28 - PrimePress. The political crisis in Belarus has been making a negative impact on the expectations of economic actors and the overall economic situation in the country. At the same time, the low comparative base effect, which kept supporting Belarus’ economic performance in the first half of the year, is gradually receding. As a result, the country is experiencing a slowdown in the growth rate of key gross indicators, accelerating inflation and a decline in real household incomes. Table 1. Key indicators of Belarus’ macroeconomic performance: <table border="1" cellspacing="1" cellpadding="0"> <tbody> <tr> <td> Indicator </td> <td> Real figures, Jan-Sep 2021, billion Belarusian rubles </td> <td> Jan-Sep 2021 on Jan-Sep 2020, % </td> <td> Official forecast for 2021, % </td> </tr> <tr> <td> GDP </td> <td> 125.952 </td> <td> +2.7% </td> <td> +1.8% (+1.1% in Jan-Sep 2021) </td> </tr> <tr> <td> Industrial output </td> <td> 111.118 </td> <td> +7.9% </td> <td> no forecast </td> </tr> <tr> <td> Fixed capital investments </td> <td> 20.794 (16.5% of GDP) </td> <td> minus 8.1% </td> <td> 21.3-21.7% of GDP </td> </tr> <tr> <td> Inflation growth since early 2021, % </td> <td> 7.5* </td> <td> 10.2 (Sep 2021 on Sep 2020) </td> <td> 5% at most </td> </tr> <tr> <td> Foreign trade balance (goods and services), USD billion </td> <td> +2.328** </td> <td> +1.231** </td> <td> no forecast </td> </tr> <tr> <td> Real disposable household incomes, year on year, % </td> <td> +2.9** </td> <td> +5.4*** </td> <td> +1.6% (+1.1% in Jan-Sep 2021) </td> </tr> </tbody> </table> * year to date ** Jan-Aug 2021 *** Jan-Aug 2020 GDP slowing down for third month in a row In early October, the World Bank published an upd ated macro-forecast for Europe and Central Asia (WB’s Europe and Central Asia Economic Upd ate). According to the document, the World Bank now expects Belarusian GDP to grow by 1.2% in 2021 (the lowest growth rate in the region), while in 2022 WB analysts forecast a GDP drop by 2.8%. The World Bank’s economic update says that the outlook for Belarus’ economy remains dim due to ongoing geopolitical and domestic political tensions, given the recently imposed sectoral economic sanctions. Long-term growth prospects are also constrained by persistent problems related to the slow pace of reforms, which hamper competition and private sector development. World Bank economists reckon that a strong recovery in export volumes in the first half of 2021 was the main factor behind the recovery of regional economies. In turn, export volumes were boosted by the normalisation of economic activity in the EU, a surge in commodity prices and higher domestic demand on the back of vaccination and government stimulus packages. The Belarusian authorities are more optimistic, despite increasing sanctions pressure. “Next year we plan to achieve (economic growth rate – editor’s note) of about 102.9%. This is the program level, and we are trying to follow this fairway," Economy Minister Alexander Chervyakov said on 21 September. The optimism of the Belarusian government can be attributed to the interim results of the current year. In January-September 2021, the National Statistical Committee of Belarus (Belstat) recorded a 2.7% year-on-year increase in GDP to Br125.95bn. Belarus’ GDP has been losing pace for a third month in a row. At the same time, this figure is still above the official forecast for the current year (+1.8%). In January-September 2021, gross value added in manufacturing increased by 7.7% to Br28.21bn (22.4% of GDP), in wholesale and retail trade – up 3.4% to Br10.57bn (8.4% of GDP), in the ITC sector - up 9.6% to Br9.487 billion (7.5% of GDP), in agriculture, forestry and fishery – down 6% to Br8.714 billion (6.9% of GDP). Investment activity remains low The hopes of the Belarusian authorities to launch a new investment cycle in 2021 have not been justified. According to official forecasts, the share of fixed capital investment in GDP should reach 21.3-21.7% this year, but in January-September the figure was only 16.5% of GDP against 19.2% in the same period in 2020. In nominal terms, investment in fixed assets decreased by 8.1% year on year in January-September 2021 to Br20.794 billion. This includes investments in construction and installation works (including installation of equipment), which decreased by 11.7% down to Br10.672 billion, costs for the purchase of machinery, equipment and vehicles - down 3.8% to Br7.878 billion. The decline in investment activity can be attributed to the optimisation of the 2021 budget towards increasing the share of current spending at the expense of capital spending, as well as the freezing of financing of new infrastructure projects by the EBRD and EIB. According to the National Statistics Committee (Belstat), as of 1 October 2021, there were 6.7 thousand unfinished projects under construction (excluding individual developers and small businesses) against 6.3 thousand at the beginning of this year. In this case, 41.8% of objects were under construction have exceeded the standard terms of construction duration (48.7% a year earlier). Temporarily suspended and mothballed the construction of 1 thousand facilities, which corresponds to the level as of 1 October 2020. The volume of funds invested in housing construction in Jan-Sep 2021 amounted to Br4.3bn, down 3% year on year in comparable prices. The area of housing commissioned in the first six months of this year was 3.071 million square metres, which is 11.6% more than in January-September 2020. Against the backdrop of negative expectations, the traditional sources of investment financing in Belarus, such as bank loans, state budget funds, and companies’ own funds, are significantly limited this year. At the same time, the latter remain the basis of investment activities of Belarusian companies. According to Belstat, in January-September 2021, enterprises’ own funds accounted for 45.7% of the total funding (42.6% a year earlier), down 2.2% in comparable prices to Br9.499 billion. Investment from the consolidated budget in January-September 2021 accounted for 17.2% of the total investment (19.9% a year earlier), down 12.1% in comparable prices to Br3.579 billion. Investment in fixed assets at the expense of bank credits (loans) decreased by 13.6% to Br2.653 billion (12.8% this year against 13.5% in the total volume of investment a year earlier), foreign investment decreased by 15.4% year on year to Br530.4 million (2.6% against 2.7%). It can be noted that both foreign and domestic investors refuse to implement investment projects in Belarus not only because of the high political uncertainty inside the country, but also under the influence of sanctions pressure against Belarus by Western countries. On 21 September, Prime Minister Roman Golovchenko said that investment in fixed capital in Belarus should grow by 3.3% in 2022. However, if we evaluate the dynamics of fixed-asset investment in recent years, it turns out that an increase of 3.3% is not sufficient to restore investment to 2019 levels. The investment growth expected by the government will not even compensate for the fall of investment in 2021. Also, the current level of fixed investment is very far from the pre-crisis level of 2013. Due to the investment decline in 2014-2016 and in 2020-2021, real investment is more than 30% lower than in 2013. Inflation accelerating, already twice as high as target The authorities’ increased focus on price growth has not yet led to the expected result of a slowdown in inflation processes. On the contrary, extensive state regulation of prices along with heightened inflation expectations are accelerating price growth. Inflation is also negatively influenced by increased consumer price growth in Belarus’ trading partners. According to Belstat, in September 2021 the pace of year-on-year growth of consumer prices accelerated to 10.2% against 9.8% in Aug 2021 with the initial forecast of 5% for the whole of 2021. The annual growth in prices for socially important goods, according to MART (Ministry for Antimonopoly Regulation and Trade), increased to 9.9% in September against 8.4% in August 2021. Year-on-year core inflation remained unchanged at 9.9% in September. At the same time, the growth of regulated prices and tariffs accelerated to 10.4% year-on-year against 9.7% in August. Prices of fruit and vegetable products rose by 14.2% year on year in September compared to 6.7% a month before. Annual trend inflation also accelerated, amounting to 8.6% in September 2021 against 8.4% in August this year. “The year-on-year increase in the consumer price index and the consumer price index for socially important goods was mainly influenced by higher prices for meat and meat products, fruit and vegetables, against the background of increased regulated motor fuel prices, as well as planned increases in tariffs for housing and utilities services and higher education services,” MART explained. Given that the end of the year is traditionally an inflationary period, it can be assumed that the situation is unlikely to change for the better by the end of this year and December will see a rise in consumer prices of around 10%. A similar forecast is contained in a review by the Eurasian Development Bank (EDB). EDB experts say it is highly probable that the annual inflation rate will remain close to 10% by the end of 2021. Earlier, in its September macroeconomic review, the EDB predicted inflation in Belarus in 2021 at 9.2% and its slowdown to 6.5% in 2022. At the same time, the statement made by the president of Belarus on 22 October 2021 during a meeting with senior members of the government raises concerns. Lukashenko instructed to maintain a favourable ratio between the growth of prices and private household incomes. “The price-to-income ratio is a very important issue which people lament over. People don’t care how high prices in supermarkets are if they have enough money in their pockets to buy goods at these prices. This ratio and this balance must be maintained at all costs,” said Lukashenko It is not yet clear what the president’s reasoning will lead to, but it is possible that the price-income ratio could be maintained by unjustified increases in household incomes through administrative methods, which will inevitably lead to an even greater acceleration of inflation. According to Minister of Economy Alexander Chervyakov, the draft ordinance on Belarus socio-economic development forecast for 2022 envisages that prices will not rise by more than 6% in 2022. The draft law on amendments and additions to the 2022 Tax Code provides for the indexation of tax rates se t in Belarusian roubles by the forecasted inflation rate. The indexation amount is 7.2%, which indicates the average annual growth rate of consumer prices expected by the authorities next year. Hence, the authorities acknowledge that they will not be able to reduce inflation to match the National Bank’s medium-term target of 5% in 2022. Consumer price growth is no longer within the guidelines se t out in the 2020 monetary policy guidelines. Given the persistence of elevated inflationary pressures in Russia and the rest of the world, there is a substantial likelihood that Belarus’ official forecast will not be met in 2022 either. Labour market: moderate unemployment, falling wages The labour market in 2021 is characterized by moderate unemployment. According to a sample survey of households, released by the National Statistics Committee, the unemployment figures classified according to the criteria of the International Labour Organization (ILO) amounted to 186.6 thousand people in August 2021 compared to 204 thousand in August 2020. The average age of the unemployed was 36.6 years. Young people aged 16-30 account for 67,100 people, or 35.9% of the total number of unemployed. The actual unemployment rate in August 2021 was 3.7% of the labour force compared to 4% a year earlier. At the same time, it may be noted that the unemployment rate for the working age population was 4.2% and 4% in February and May 2021, respectively. At the same time, only 7,600 persons were registered as unemployed in labour, employment and social protection agencies at the end of August 2021. The registered unemployment rate at the end of August 2021 was 0.2%. The downward trend in the number of employed persons continues. In August 2021 there were 4.913 million employed persons in the economy, which is 0.5% less than in August 2020. This phenomenon might be related to the release of workers who will reach retirement age in 2020-2021. In addition to moderate unemployment, the level of nominal average wages in Belarus has been decreasing for a second month in a row. According to Belstat, September’s average wage decreased by 1.4% month on month, following a 0.6% decrease in August. However, in year-on-year, nominal wages increased by 13.7% in September 2021. The average wage in real terms (adjusted for inflation) increased by 3.2% year on year in September 2021. In month-on-month terms, it decreased by 2.7% and by 9% year to date. In dollar terms, the average wage went down in September, despite the strengthening of the Belarusian ruble. Based on the average monthly exchange rate calculated by the National Bank, the USD equivalent of the average wage in September 2021 was $576.2 against $583.1 in August and $484 in September 2020. Traditionally, the highest nominal salary in Belarus is paid to employees of the ITC sector. In September 2021, they received an average salary of Br4,428 (+4.2% yoy). Financial and insurance activities rank second with an average salary of Br1,926 (+15.3%). The lowest average salary is in education and activities in the field of administrative and support services - Br948.5 (+11.4%) and Br940.1 (+12.1%), respectively. Thus, the dynamics of wages in Belarus in recent months has been in line with general trends in the economy, which, despite outpacing forecasts of growth, is inefficient and cannot provide income growth for the majority of those employed in it. The authorities are trying to stimulate wage growth (at least in statistical reports) by combating wages in envelopes (wages paid unofficially), but a significant effect of the revealed shadow incomes of Belarusians cannot be expected yet. At the same time, administrative measures to stimulate wage growth in order to compensate for accelerated price increases may pose risks. Persistent vulnerabilities in economy The dynamics of the Belarusian economy in the foreseeable future will continue to be hampered by the inefficient ownership structure, the level of current foreign currency debt payments and Western sanctions. At the same time, international financial institutions and rating agencies are more sceptical about the prospects of the Belarusian economy than the government. In 2022, foreign experts predict either weak growth or a decline in Belarus’ GDP. By the end of this year and next year, Belarus is expected to maintain an elevated inflationary background, a shortage of fixed investment, a budget deficit and negative economic expectations in general. At the same time, the deficit of resources inside the country is expected to be covered by the external circuit - by increasing export volumes, which keeps Belarus highly dependent on the external economic environment, which has become almost unpredictable lately. PrimePress Business Analysis Agency

2021-10-28

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ANALYSIS: Belarus’ economy slowing growth pace, inflation accelerating

Monthly overview of Belarus’ real economy sector, Jan-Sep 2021

MINSK, Sep 28 - PrimePress. The political crisis in Belarus has been making a negative impact on the expectations of economic actors and the overall economic situation in the country. At the same time, the low comparative base effect, which kept supporting Belarus’ economic performance in the first half of the year, is gradually receding. As a result, the country is experiencing a slowdown in the growth rate of key gross indicators, accelerating inflation and a decline in real household incomes.

Table 1. Key indicators of Belarus’ macroeconomic performance:

Indicator	Real figures, Jan-Sep 2021, billion Belarusian rubles	Jan-Sep 2021 on Jan-Sep 2020, %	Official forecast for 2021, %
GDP	125.952	+2.7%	+1.8% (+1.1% in Jan-Sep 2021)
Industrial output	111.118	+7.9%	no forecast
Fixed capital investments	20.794 (16.5% of GDP)	minus 8.1%	21.3-21.7% of GDP
Inflation growth since early 2021, %	7.5*	10.2 (Sep 2021 on Sep 2020)	5% at most
Foreign trade balance (goods and services), USD billion	+2.328**	+1.231**	no forecast
Real disposable household incomes, year on year, %	+2.9**	+5.4***	+1.6% (+1.1% in Jan-Sep 2021)

* year to date

** Jan-Aug 2021

*** Jan-Aug 2020

GDP slowing down for third month in a row

In early October, the World Bank published an upd ated macro-forecast for Europe and Central Asia (WB’s Europe and Central Asia Economic Upd ate). According to the document, the World Bank now expects Belarusian GDP to grow by 1.2% in 2021 (the lowest growth rate in the region), while in 2022 WB analysts forecast a GDP drop by 2.8%.

The World Bank’s economic update says that the outlook for Belarus’ economy remains dim due to ongoing geopolitical and domestic political tensions, given the recently imposed sectoral economic sanctions. Long-term growth prospects are also constrained by persistent problems related to the slow pace of reforms, which hamper competition and private sector development.

World Bank economists reckon that a strong recovery in export volumes in the first half of 2021 was the main factor behind the recovery of regional economies. In turn, export volumes were boosted by the normalisation of economic activity in the EU, a surge in commodity prices and higher domestic demand on the back of vaccination and government stimulus packages.

The Belarusian authorities are more optimistic, despite increasing sanctions pressure. “Next year we plan to achieve (economic growth rate – editor’s note) of about 102.9%. This is the program level, and we are trying to follow this fairway," Economy Minister Alexander Chervyakov said on 21 September.

The optimism of the Belarusian government can be attributed to the interim results of the current year. In January-September 2021, the National Statistical Committee of Belarus (Belstat) recorded a 2.7% year-on-year increase in GDP to Br125.95bn.

Belarus’ GDP has been losing pace for a third month in a row. At the same time, this figure is still above the official forecast for the current year (+1.8%).

In January-September 2021, gross value added in manufacturing increased by 7.7% to Br28.21bn (22.4% of GDP), in wholesale and retail trade – up 3.4% to Br10.57bn (8.4% of GDP), in the ITC sector - up 9.6% to Br9.487 billion (7.5% of GDP), in agriculture, forestry and fishery – down 6% to Br8.714 billion (6.9% of GDP).

Investment activity remains low

The hopes of the Belarusian authorities to launch a new investment cycle in 2021 have not been justified. According to official forecasts, the share of fixed capital investment in GDP should reach 21.3-21.7% this year, but in January-September the figure was only 16.5% of GDP against 19.2% in the same period in 2020.

In nominal terms, investment in fixed assets decreased by 8.1% year on year in January-September 2021 to Br20.794 billion. This includes investments in construction and installation works (including installation of equipment), which decreased by 11.7% down to Br10.672 billion, costs for the purchase of machinery, equipment and vehicles - down 3.8% to Br7.878 billion.

The decline in investment activity can be attributed to the optimisation of the 2021 budget towards increasing the share of current spending at the expense of capital spending, as well as the freezing of financing of new infrastructure projects by the EBRD and EIB.

According to the National Statistics Committee (Belstat), as of 1 October 2021, there were 6.7 thousand unfinished projects under construction (excluding individual developers and small businesses) against 6.3 thousand at the beginning of this year. In this case, 41.8% of objects were under construction have exceeded the standard terms of construction duration (48.7% a year earlier). Temporarily suspended and mothballed the construction of 1 thousand facilities, which corresponds to the level as of 1 October 2020.

The volume of funds invested in housing construction in Jan-Sep 2021 amounted to Br4.3bn, down 3% year on year in comparable prices. The area of housing commissioned in the first six months of this year was 3.071 million square metres, which is 11.6% more than in January-September 2020.

Against the backdrop of negative expectations, the traditional sources of investment financing in Belarus, such as bank loans, state budget funds, and companies’ own funds, are significantly limited this year. At the same time, the latter remain the basis of investment activities of Belarusian companies.

According to Belstat, in January-September 2021, enterprises’ own funds accounted for 45.7% of the total funding (42.6% a year earlier), down 2.2% in comparable prices to Br9.499 billion.

Investment from the consolidated budget in January-September 2021 accounted for 17.2% of the total investment (19.9% a year earlier), down 12.1% in comparable prices to Br3.579 billion. Investment in fixed assets at the expense of bank credits (loans) decreased by 13.6% to Br2.653 billion (12.8% this year against 13.5% in the total volume of investment a year earlier), foreign investment decreased by 15.4% year on year to Br530.4 million (2.6% against 2.7%).

It can be noted that both foreign and domestic investors refuse to implement investment projects in Belarus not only because of the high political uncertainty inside the country, but also under the influence of sanctions pressure against Belarus by Western countries.

On 21 September, Prime Minister Roman Golovchenko said that investment in fixed capital in Belarus should grow by 3.3% in 2022.

However, if we evaluate the dynamics of fixed-asset investment in recent years, it turns out that an increase of 3.3% is not sufficient to restore investment to 2019 levels. The investment growth expected by the government will not even compensate for the fall of investment in 2021.

Also, the current level of fixed investment is very far from the pre-crisis level of 2013. Due to the investment decline in 2014-2016 and in 2020-2021, real investment is more than 30% lower than in 2013.

Inflation accelerating, already twice as high as target

The authorities’ increased focus on price growth has not yet led to the expected result of a slowdown in inflation processes. On the contrary, extensive state regulation of prices along with heightened inflation expectations are accelerating price growth. Inflation is also negatively influenced by increased consumer price growth in Belarus’ trading partners.

According to Belstat, in September 2021 the pace of year-on-year growth of consumer prices accelerated to 10.2% against 9.8% in Aug 2021 with the initial forecast of 5% for the whole of 2021. The annual growth in prices for socially important goods, according to MART (Ministry for Antimonopoly Regulation and Trade), increased to 9.9% in September against 8.4% in August 2021.

Year-on-year core inflation remained unchanged at 9.9% in September. At the same time, the growth of regulated prices and tariffs accelerated to 10.4% year-on-year against 9.7% in August. Prices of fruit and vegetable products rose by 14.2% year on year in September compared to 6.7% a month before.

Annual trend inflation also accelerated, amounting to 8.6% in September 2021 against 8.4% in August this year.

“The year-on-year increase in the consumer price index and the consumer price index for socially important goods was mainly influenced by higher prices for meat and meat products, fruit and vegetables, against the background of increased regulated motor fuel prices, as well as planned increases in tariffs for housing and utilities services and higher education services,” MART explained.

Given that the end of the year is traditionally an inflationary period, it can be assumed that the situation is unlikely to change for the better by the end of this year and December will see a rise in consumer prices of around 10%. A similar forecast is contained in a review by the Eurasian Development Bank (EDB). EDB experts say it is highly probable that the annual inflation rate will remain close to 10% by the end of 2021.

Earlier, in its September macroeconomic review, the EDB predicted inflation in Belarus in 2021 at 9.2% and its slowdown to 6.5% in 2022.

At the same time, the statement made by the president of Belarus on 22 October 2021 during a meeting with senior members of the government raises concerns. Lukashenko instructed to maintain a favourable ratio between the growth of prices and private household incomes. “The price-to-income ratio is a very important issue which people lament over. People don’t care how high prices in supermarkets are if they have enough money in their pockets to buy goods at these prices. This ratio and this balance must be maintained at all costs,” said Lukashenko

It is not yet clear what the president’s reasoning will lead to, but it is possible that the price-income ratio could be maintained by unjustified increases in household incomes through administrative methods, which will inevitably lead to an even greater acceleration of inflation.

According to Minister of Economy Alexander Chervyakov, the draft ordinance on Belarus socio-economic development forecast for 2022 envisages that prices will not rise by more than 6% in 2022.

The draft law on amendments and additions to the 2022 Tax Code provides for the indexation of tax rates se t in Belarusian roubles by the forecasted inflation rate. The indexation amount is 7.2%, which indicates the average annual growth rate of consumer prices expected by the authorities next year.

Hence, the authorities acknowledge that they will not be able to reduce inflation to match the National Bank’s medium-term target of 5% in 2022. Consumer price growth is no longer within the guidelines se t out in the 2020 monetary policy guidelines. Given the persistence of elevated inflationary pressures in Russia and the rest of the world, there is a substantial likelihood that Belarus’ official forecast will not be met in 2022 either.

Labour market: moderate unemployment, falling wages

The labour market in 2021 is characterized by moderate unemployment. According to a sample survey of households, released by the National Statistics Committee, the unemployment figures classified according to the criteria of the International Labour Organization (ILO) amounted to 186.6 thousand people in August 2021 compared to 204 thousand in August 2020.

The average age of the unemployed was 36.6 years. Young people aged 16-30 account for 67,100 people, or 35.9% of the total number of unemployed.

The actual unemployment rate in August 2021 was 3.7% of the labour force compared to 4% a year earlier. At the same time, it may be noted that the unemployment rate for the working age population was 4.2% and 4% in February and May 2021, respectively.

At the same time, only 7,600 persons were registered as unemployed in labour, employment and social protection agencies at the end of August 2021. The registered unemployment rate at the end of August 2021 was 0.2%.

The downward trend in the number of employed persons continues. In August 2021 there were 4.913 million employed persons in the economy, which is 0.5% less than in August 2020. This phenomenon might be related to the release of workers who will reach retirement age in 2020-2021.

In addition to moderate unemployment, the level of nominal average wages in Belarus has been decreasing for a second month in a row. According to Belstat, September’s average wage decreased by 1.4% month on month, following a 0.6% decrease in August.

However, in year-on-year, nominal wages increased by 13.7% in September 2021.

The average wage in real terms (adjusted for inflation) increased by 3.2% year on year in September 2021. In month-on-month terms, it decreased by 2.7% and by 9% year to date.

In dollar terms, the average wage went down in September, despite the strengthening of the Belarusian ruble. Based on the average monthly exchange rate calculated by the National Bank, the USD equivalent of the average wage in September 2021 was $576.2 against $583.1 in August and $484 in September 2020.

Traditionally, the highest nominal salary in Belarus is paid to employees of the ITC sector. In September 2021, they received an average salary of Br4,428 (+4.2% yoy). Financial and insurance activities rank second with an average salary of Br1,926 (+15.3%). The lowest average salary is in education and activities in the field of administrative and support services - Br948.5 (+11.4%) and Br940.1 (+12.1%), respectively.

Thus, the dynamics of wages in Belarus in recent months has been in line with general trends in the economy, which, despite outpacing forecasts of growth, is inefficient and cannot provide income growth for the majority of those employed in it. The authorities are trying to stimulate wage growth (at least in statistical reports) by combating wages in envelopes (wages paid unofficially), but a significant effect of the revealed shadow incomes of Belarusians cannot be expected yet.

At the same time, administrative measures to stimulate wage growth in order to compensate for accelerated price increases may pose risks.

Persistent vulnerabilities in economy

The dynamics of the Belarusian economy in the foreseeable future will continue to be hampered by the inefficient ownership structure, the level of current foreign currency debt payments and Western sanctions. At the same time, international financial institutions and rating agencies are more sceptical about the prospects of the Belarusian economy than the government. In 2022, foreign experts predict either weak growth or a decline in Belarus’ GDP.

By the end of this year and next year, Belarus is expected to maintain an elevated inflationary background, a shortage of fixed investment, a budget deficit and negative economic expectations in general. At the same time, the deficit of resources inside the country is expected to be covered by the external circuit - by increasing export volumes, which keeps Belarus highly dependent on the external economic environment, which has become almost unpredictable lately.

PrimePress Business Analysis Agency

2021-10-28

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