World Bank upgrades 2021 outlook on Belarus’ GDP dynamics by 3.4pp to 1.2%

<p> MINSK, Oct 6 - PrimePress. The World Bank (WB) has improved its 2021 forecast for Belarus’ GDP dynamics by 3.4 percentage points to 1.2% and has downgraded the 2022 forecast by 4.7 percentage points to minus 2.8%. The bank stated that in its Europe and Central Asia Economic Update published on 5 October. </p> <p>   </p> <p> As previously reported, in March 2021 the World Bank improved its forecast for Belarus’ GDP dynamics in 2021 by 0.5pp to minus 2.2% year on year. This forecast was affirmed in the WB Global Economic Prospects published on June 8. Back then the WB outlook referred to the following factors as the key drivers of Belarus’ sustained recession in 2021 and weak recovery thereafter: ongoing political tensions, continued headwinds from the Russian “tax manoeuvre”, and lack of structural reforms. </p> <p>   </p> <p> The WB attributes the revision of the forecast to an improvement in the external economic environment for Belarus’ main export items: “A solid 32.7% increase in goods and services exports y/y in January-June 2021 follows the 14 percent decline during the same period of 2020.” </p> <p>   </p> <p> “External factors continue to shape Belarus’ growth trajectory, as the drastic improvement in external demand and commodity price surge of 2021 helped to temporarily overcome the 2020 pandemicinduced recession”. </p> <p>   </p> <p> “Once the base effects due to the recession in 2020 have passed and sectoral sanctions will gradually take a toll, year on year growth is likely to stall in the second half of 2021, leaving full-year real GDP growth to reach 1.2% yoy”. </p> <p>   </p> <p> WB analysts say economic growth in Belarus in 2021 is also due to extensive fiscal and administrative support from the state. Going forward, the room for fiscal stimulus will largely depend on refinancing opportunities due to sizeable public debt payments ($2.4bn in 2022 and $3.3bn in 2023). Issuing bonds in the Russian markets is one of the options, as access to the EU financial markets is restricted by sanctions. </p> <p>   </p> <p> The World Bank predicts an acceleration of inflation in Belarus in 2021 to 10.5%, a slowdown in 2022 to 7.1% and in 2023 to 5.7%. The current account deficit will amount to 0.9% of GDP in 2021, 3% in 2022 and 2.6% in 2023. </p> <p>   </p> <p> The WB notes a decline in domestic demand and investment inflows, an outflow of foreign currency deposits (driven by high levels of inflation expectations and uncertainty), and the impact of EU and US sectoral sanctions as the main factors constraining economic growth. </p> <p>   </p> <p> The major challenge is to adjust to sectoral economic sanctions targeting Belarus’s commodity exports. Manufacturing production chains could be affected, too, as the foreign producers of components might restrict their supplies, making Belarusian manufacturers search for secondbest substitutes. According to WB experts, the impact of external sanctions is exacerbated by the lack of structural reforms, which increases the dependence of the Belarusian economy (GDP dynamics) on external conditions and technological imports. </p> <p>   </p> <p> Taking into account the complex impact of the sectoral sanctions, the WB downgraded its forecast for Belarus’ GDP dynamics in 2022 by 4.7pp to minus 2.8% (in the spring report it was projected to grow by 1.9%). In 2023 the WB estimates Belarus’ GDP growth at 2.3% (1.2%). </p> <p>   </p> <p> Belarus’ GDP decreased by 0.9% yoy in 2020, while the official forecast said it would grow by 2.8%. In January-August 2021, Belarus’ GDP grew by 3% yoy. In 2021, the Belarusian authorities forecast 1.8% GDP growth. In 2022, the Belarusian government expects the country's economy to expand 2.9%. End </p>

2021-10-07

Primepress