Belarus flag Belarus: Economic and Political Overview

The economic context of Belarus

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).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 72.8468.8666.3366.6368.18
GDP (Constant Prices, Annual % Change) -3.71.61.30.60.7
GDP per Capita (USD) 7,8697,4777,2387,3087,515
General Government Balance (in % of GDP) -3.4-0.20.61.31.3
General Government Gross Debt (in % of GDP) 41.344.144.243.341.5
Inflation Rate (%) n/a4.75.74.25.0
Unemployment Rate (% of the Labour Force) 4.24.03.63.53.5
Current Account (billions USD) 2.681.891.321.020.58
Current Account (in % of GDP) 3.72.72.01.50.8

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Belarus has several natural resources on its territory: wood, minerals, some small fields of oil and natural gas, granite, limestone, clay, sand, peat and dolomite. Agriculture accounts for 6.8% of the country's GDP and 11% of the working population (World Bank, latest data available). The main agricultural products are beef and pork, poultry, milk and cereals (including potatoes, vegetables, cucurbits and seeds). Belarus is the third-largest producer of rye and flax fibre in the world. The country is also the seventh-largest exporter of butter, the eighth-largest exporter of chicken and the twelfth-largest exporter of cheese in the world. Nearly 60% of agricultural production is concentrated in highly subsidized state-owned cooperative farms, inherited from kolkhozes (collective farms which formed the basis of the Soviet Union's agricultural policy). Belarusian agriculture is highly dependent on the Russian market to which it exports around 90% of its agricultural products. In 2022, the agricultural production in farms of all types (agricultural organisations, private farms and household plots) stood at BYN 31.8 billion, up by 3.6% compared to the previous year (Belstat).
 
Industry accounts for 32.2% of the country's GDP, employing around 30% of the active population. As a former country of the USSR, Belarus has a developed but ageing industrial base that is heavily subsidized. The main industries are machine tools, agricultural equipment, fertilizers, petroleum and chemical products, food products (including beverages and tobacco), prefabricated building materials, motor vehicles, textiles and household goods equipment (such as refrigerators, watches, televisions and radios). The World Bank estimates that the manufacturing sector alone contributes 23% of the country’s GDP, mainly thanks to the manufacture of food products and of coke and refined petroleum products. According to Belstat, in 2022 the volume of industrial production in current prices stood at BYN 169.6 billion, down by 5.4% compared to one year earlier.

The tertiary sector accounts for 48.3% of GDP, showing a sharp rise since the break-up of the USSR. 59% of the working population is employed in services. Information technology, transport and logistics are the fastest-growing sectors. According to Belstat, in the first three quarters of 2022 wholesale turnover reached BYN 49.7 billion (97.5% vis-à-vis the same period one year earlier), whereas retail turnover stood at BYN 46.3 billion (-1.8% year-on-year).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 8.1 32.6 59.4
Value Added (in % of GDP) 7.7 33.2 48.3
Value Added (Annual % Change) 4.4 -6.1 -5.4

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
61/100
World Rank:
95
Regional Rank:
43

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Ministry of Finance (in Belarusian only)
Ministry of Energy
Statistical Office
The Ministry of Statistics and Analysis of the Republic of Belarus
Central Bank
National Bank of the Republic of Belarus
Stock Exchange
Belarusian Stock Exchange
Economic Portals
Portal of the Republic of Belarus
 

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Latest Update: February 2024