Studi Economici


Population 9.5 million
GDP 4,989 US$
Country risk assessment
Business Climate
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major macro economic indicators

  2016 2017 2018 2019(f)
GDP growth (%) -2.5 2.4 3.3 1.8
Inflation (yearly average, %) 11.8 6.0 5.0 6.0
Budget balance (% GDP) -1.7 -0.3 -1.3 -3.9
Current account balance (% GDP) -3.5 -1.7 -2.5 -4.0
Public debt* (% GDP) 53.5 53.4 51.7 54.1


*Including guarantee of debts of public companies (f): forecast


  • Strategically located between Russia and the European Union with a well-developed transport network
  • Relatively well-trained and skilled workforce
  • Large industrial sector
  • Low rates of inequality and poverty


  • High dependence on Russia in terms of energy, economy, and finances
  • Sensitive to the price of oil and its derivatives
  • State plays a massive role in the economy (56% of value added, 70% of GDP); exchange controls
  • Poor governance (high corruption, weak legal system)
  • Shrinking labour force
  • Geographically isolated between NATO and Russia

Risk assessment

Growth slowed by weak exports

After peaking in 2018, growth is expected to slow markedly in 2019, burdened by a decline in demand from its main partners. Exports (63% of GDP) to Russia, the eurozone and the United Kingdom have fallen sharply, mainly in oil and gas, petrochemicals, agriculture, and capital goods (trucks, agricultural machinery, etc.). Moreover, exports were affected by the interruption of Russian oil supplies from the Druzhba pipeline, following an episode of contamination due to an oil well cleaning solvent in April 2019 that lasted several months. In addition, fixed capital formation will likely be less buoyant in 2019. Nevertheless, household consumption (55% of GDP) is holding up, thanks to a strong wage growth that should outpace inflation, which itself is slightly higher than in 2018 due to poor harvests.


External accounts influenced by Russia

After Belarus refused to recognise the annexation of Crimea and to have a military base, Russia used the pretext of the establishment of the Eurasian Economic Union in 2015 to raise the price of gas and then reduce its oil deliveries. An agreement was reached in early 2017, ending a costly dispute for the Belarus economy. Russia has granted an increase in oil deliveries allowed for re-export, refinanced gas arrears and granted new loans. As a result, Belarus was able to issue euro bonds, both to replenish partially its reserves – which stood at around 2 months of imports and 70% of short-term debt in 2019 – and to consolidate its external debt service. This debt, which accounts for 69% of GDP, results from a recurring current account deficit, mainly related to the payment of debt interest. The deficit in trade in goods (5.9% of GDP in 2018) is offset by the surplus in services linked to the transit of goods and gas from Russia and Asia to Western Europe. The current account deficit is financed by foreign direct and portfolio investment. The deficit is likely to widen, not only because of increased debt interest, but also because of the change in Russia's approach to hydrocarbon taxation from 2019. By 2023, customs duties on hydrocarbon exports will be phased out, offset by an increase in the tax collected at the extraction level. As Belarus's imports of Russian petroleum products are exempt from these customs duties, the switchover could prove costly for the country. In the absence of adjustments, which are currently under negotiation, the cost would amount to USD 300 million (0.5% of GDP) for 2019 alone. Conversely, the forthcoming completion by Rosatom of the Astraviets nuclear power plant – one of whose two reactors will come online at the end of 2019 – should be accompanied by a decline in imports of gas and capital goods. The Belarusian rouble, which operates under a managed float against a basket of currencies (the rouble, the US dollar and the euro), is not immune to weakness, particularly against the Russian rouble.


A massive and inefficient public sector

Public debt has steadily increased and currently represents more than half of GDP, with 90% of the total amount denominated in foreign currencies. Guarantees from central or local government to state-owned companies (which account for one third of GDP) and banks (which hold 66% of banking assets) are equivalent to 9% of GDP. In addition, the agricultural sector (7% of GDP) is almost entirely state-controlled. The public sector has to cope with inefficiency and government instructions that are not always relevant. Consolidation of the public sector will be difficult due to budgetary constraints, especially with the government continuing to wield its influence, notably by directing credit. Privatisation and reorganisation projects, potentially costly in terms of employment and popularity, have been shelved, delaying the conclusion of a financial programme with the IMF. Finally, the public deficit is likely to increase as export taxes on refined petroleum products and derivatives decline, the rise in the price of Russian crude oil is reducing margins.


A president maintaining the balance between Russia and the West

President Alexandr Lukashenko, in power since 1994, was re-elected for the fifth time in 2015. The next election is scheduled for 2020, while parliamentary elections will take place in November 2019.The political opposition is anaemic. However, the social climate, which deteriorated following the economic crisis of 2015-2016, could become tenser again if an agreement is not reached to mitigate the negative impact of Russia’s new approach to taxing hydrocarbons. Minsk wants its companies to pay the same price as Russian refineries, since the latter receive subsidies from the Russian authorities to offset the increase in taxes on extraction. For its part, Moscow intends to make its financial support conditional on closer integration between the two countries, which includes an alignment of Belarus' foreign policy with its own – something that President Lukashenko rejects. In addition, souring relations between Russia and the West may complicate Belarus’s balancing act. China's growing use of the country as a production and export base under its Belt and Road initiative, along with increased use of Chinese financing, offer a way for Belarus to diversify its partners.


Last update: August 2019