Economic studies


Population 9.5 million
GDP 6,658 US$
Country risk assessment
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major macro economic indicators

  2018 2019 2020 (e) 2021 (f)
GDP growth (%) 3.1 1.2 -3.0 2.2
Inflation (yearly average, %) 4.9 5.6 5.1 5.1
Budget balance (% GDP)* 1.6 0.3 -3.6 -2.2
Current account balance (% GDP) 0.0 -1.2 -1.9 -1.3
Public debt (% GDP)* 47.5 41.9 51.0 48.6

(e): Estimate (f): Forecast *Off-budget operations and secured debts of public enterprises included


  • Strategically located between Russia and the European Union with a well-developed transport network: bridgehead for China’s Silk Road
  • Member of the Eurasian Economic Union
  • Relatively well trained and skilled workforce
  • Large industrial sector (26% of GDP)
  • Little inequality and poverty is rare


  • High energy and financial dependence on Russia
  • Low geographical and sectoral diversification of exports
  • Sensitive to the level of petroleum product prices (purchase price negotiated with Russia)
  • State plays a massive role in the economy (56% of value added, 70% of GDP)
  • Poor governance (high corruption, weak legal system, institutional rigidity, lack of pluralism)
  • Decrease in the active population and outmigration of the most educated youth
  • Geographically isolated between NATO and Russia

Risk assessment

Political turmoil weighs on the recovery

The economy contracted moderately in 2020, more because of the worsening political situation rather than the COVID-19 crisis. The president has refused to impose strict measures to combat the spread of the virus. Only social distancing measures have been implemented, as well as a ban on international flights and ground transport from abroad. Anti-government demonstrations since August 2020, accompanied by strikes, have significantly affected activity. The continuation of demonstrations in 2021 could delay the recovery and continue to weigh on investments (25% of GDP), especially foreign investments, due to political uncertainty. Household consumption (75% of GDP), which has been affected by the closure of shops and supply chain disruptions, had not returned to its pre-COVID-19 level at the start of the protest movement. In 2021, it will continue to face high but still stable inflation, with sluggish demand and control over commodity prices offsetting the impact of the depreciation of the rouble (25% against the euro in 2020) on the prices of imported products. In addition, wages and credit are expected to grow only slightly. Manufacturing production (20% of GDP), is affected by the weakness of domestic demand, as well as by the hesitant recovery of external demand, both in Russia and in Western Europe. Sporadic strike action is also to be expected. Finally, between now and 2023, customs duties on Russian hydrocarbon exports will have disappeared, compensated by the increase in the tax levied on their extraction. As imports of Russian oil by Belarus - for re-export after refining - are largely exempt from these customs duties, the changeover is turning out to be costly. The associated loss of government revenue is expected to negatively affect public investment.


Public and external accounts influenced by Russia

The evolution of Russian taxation on the re-exportation of oil products since 2019, as well as the drop in tax revenues associated with the fall in oil prices, is widening the deficit and increasing the public debt, of which 90% is denominated in foreign currency (end 2020). Its external share (65% of GDP), divided equally between the State and companies, is 70% owned by China and Russia. Guarantees provided to public enterprises (31% of GDP and 28% of employment) and public banks (65% of banking assets) by the central government or its local levels represent around 9% of GDP. The commercial public sector (finance, energy, potash, machinery, mechanics, and agriculture) has to come to terms with a lack of efficiency and the state's instructions are far from always relevant, but benefit from directed credit. Privatisation and reorganisation projects are postponed, delaying the conclusion of a financial program with the IMF.
The balance of trade in goods will remain negative. The Baltic States and Poland are refusing to buy electricity produced by the Astraviets nuclear power station, which came on line in November 2020. However, the start-up of the power station will be accompanied by a drop in gas imports. This deficit is compensated for by the surplus in services linked to the transit of goods and gas between Russia and Western Europe, which has been steady despite the deteriorating European economic situation. Deals on the financial terms of Russian gas supply and transport across the country from 1 January 2021 were reached in December 2020. In fact, the current account deficit will result from the income deficit, linked to the payment of increased interest on the debt and the reduction in the rebate on customs duties on Russian oil. While having reduced, foreign direct investment will finance it. Foreign exchange reserves have melted due to the operations of the Central Bank to limit the depreciation of its currency (25% against the euro in 2020) and covered less than 2 months of imports in November 2020.


Autocracy in difficulty

The re-election, with 80% of the votes, of President Alexander Lukashenko for the 6th time in August 2020 triggered major demonstrations in the country. The campaign was described as neither free nor fair by observers and the ballot was marred by massive fraud. Svetlana Tikhanovskaya, the opposition candidate validated by the government, who took over from opponents who were prevented from standing for election, should have won by a large margin, according to them. After the election, in which she obtained 10% of the votes, she fled to Lithuania and became a leading opposition figure. The population, which is facing increasing economic difficulties, is experiencing the development of a middle class sensitive to democracy. Moreover, the management of COVID-19, minimised by the government, is fuelling discontent. The protesters call for new elections, an end to repression and the release of political prisoners. The Council of the European Union imposed sanctions (ban on entering EU territory and freezing of assets) against 40 individuals considered responsible for acts of repression and intimidation during the demonstrations. Alexander Lukashenko, during a meeting in September 2020 with the Russian President, obtained a loan of USD 1.5 billion and proposed a constitutional amendment, followed by his departure, a solution supported by Russia but which remains unclear. Russia wishes both to avoid a disorderly transition, to ensure that the successor will be favourable to its interests and, in the meantime, to obtain concessions from Belarus on a rapprochement between the two countries by controlling the financial manna.


Last updated: February 2021