Newsletter Issue 72 | September – October 2021

Belarus-Russia: Has bilateral integration happened?

After about three years of tough talks between Belarus and Russia, the deepening of bilateral integration saga is formally nearing its end. The two governments have approved 28 programmes of sectoral integration within the Union State, which are expected to be signed in November. Yet, since their beginning, the talks have taken place behind closed doors and the public has largely been kept in the dark about their contents. Even now that Moscow and Minsk have announced their successful completion, publicly available information is limited and there are more questions than answers about the actual outcomes.


Newsletter Issue 71 | July – August 2021

Rising inflation endangers macroeconomic stability

Like in most of the countries around the globe, the COVID-19 pandemic also had a negative impact on the Belarusian economy. While the GDP decline was rather moderate, a rapidly rising inflation can be observed, currently at 9.8% yoy. This is directly related to the depreciation of the Belarusian ruble, which weakened by almost 20% against the US dollar in 2020. The Belarusian authorities reacted rather quickly to emerging inflationary pressures with a series of administrative measures to limit price increases. From an economic policy perspective, however, administrative measures are not an appropriate instrument for fighting inflation. The focus of the authorities should therefore primarily be on a tighter monetary policy stance to lower the high level of inflation and thus restore macroeconomic stability.


Newsletter Issue 70 | May – June 2021

High degree of uncertainty clouds economic prospects

After contracting by a comparatively low 0.9% last year, the Belarusian economy is currently showing signs of recovery: in the first 5 months of the year, GDP grew by 3.1%. However, this development should not be overestimated, as it is mainly driven by base effects. For the year as a whole, a further GDP decline of 0.4% and rather a stagnation of the economy should be expected from today’s perspective. However, this outlook is accompanied by a very high degree of uncertainty. The currently discussed economic and financial sanctions by the EU and possible actions by other countries will be an important factor, even though the exact extent of their impact is not yet fully foreseeable. The current tensions in the wake of the political crisis can be seen most clearly on the Eurobond market, where yields on Belarusian government bonds have recently risen significantly.


Economic Monitor Issue 14 | June 2021


  • Real GDP will continue to contract in 2021 (-0.4%) despite global recovery, with forecast uncertainty remaining high
  • In sectoral perspective, the development (5M2021) is extremely heterogeneous: manufacturing +11.6%; construction -14.1%
  • Inflation currently at 9.4% (May-21), well above the target set by the National Bank, which reacted late by raising interest rates to 8.5%. Slight decline in inflation expected towards the end of 2021
  • Strong depreciation of the exchange rate in 2020 (-21%), currently some stabilisation. International reserves at USD 7.8 bn in May-21; import cover remains low (2.4 months)
  • Budget deficit will widen to -3.8% of GDP in 2021, but decline in debt ratio to 45.7% of GDP expected; options for refinancing remain limited
  • Current account deficit of -0.3% of GDP in 2021 remains roughly at previous year’s level
  • After foreign trade contracted in 2020, there is currently (4M2021) a strong recovery due to base and price effects (exports +35%, imports +25%)

Special topics

Government financing. Eurobond yields reflect the uncertainty of the current situation
Administrative price regulations. Such measures are not the right instrument for tackling inflation
Export financing. Timid reform of state export financing initiated
COVID-19. Decreasing case numbers, but still quite high incidence. So far, barely any vaccinations

Download Economic Monitor 14/2021

Newsletter Issue 69 | March – April 2021

Timid reform of the state-supported export financing

Belarus has reformed export financing for the first time in several years. So far, state-supported export financing was largely monopolised at the Belarusian Development Bank. In the area of medium- and long-term export financing, there has been no possibility for commercial banks to offer export credits with state-supported interest rates since 2016. The recent legal amendment, which took place in February 2021, moderately expands the possibilities of commercial banks in the areas of export production financing, export factoring and small export credits. The Development Bank can also access new business areas, such as export production financing and export factoring. Overall, however, the reform falls well short of expectations.


Newsletter Issue 68 | January – February 2021

Against the tide: No economic recovery in sight

Last year, the entire global economy was dominated by a single issue – the COVID-19 pandemic. With a GDP decline of 0.9%, Belarus made it through the crisis relatively unscratched. This can be explained primarily by the almost complete absence of local lockdown measures.


Economic Monitor Issue 13 | updated March 2021


  • Real GDP fell by only 0.9% in 2020; decline very low in international comparison. In 2021, however, GDP will contract more sharply by -2.7%
  • Relatively soft COVID-19 measures explain the small decline in 2020; however, the ongoing political crisis clouds the outlook for 2021 in this context
  • Inflation (2020: 7.4%) rises above the target, but the National Bank has yet to react
  • Significant depreciation of exchange rate (-21%) despite sale of currency reserves (Feb-21: USD 7.1 bn); import cover drops to 2.6 months
  • Budget balance deteriorated significantly to -4.7% of GDP in 2020. As a result, sharp rise in debt ratio last year (50.9% of GDP)
  • Current account deficit increased in 2020 (-3.3% of GDP); only slight improvement in 2021 (-2.2%)
  • Foreign trade declined in 2020 due to COVID-19, the energy dispute with Russia and the low energy prices; both exports (2020: -11.9%) and imports (-17.4%) very weak

Newsletter Issue 67 | November – December 2020

The Belarusian banking sector faces new challenges

At first glance, not much has changed in the Belarusian banking sector. The number of banks has been constant for years at a total of 24. The size of the sector, measured by the ratio of assets to GDP, has also remained relatively stable. At the same time, about two-thirds of the sector is dominated by state-owned banks, which primarily provide financing to state-owned enterprises. Banks with Russian capital also play an important role, which leaves private (including Western) banks with a correspondingly small market share. 


Newsletter Issue 66 | September – October 2020

Domestic bond markets as an alternative financing source

The Belarusian economy is currently in a recession, facing capital outflows and devaluation of its currency. The banking sector is highly exposed to state enterprises, and may be strained further as borrowers’ solvency deteriorates. Over the long term, developing local currency instruments in the domestic capital markets could make the financial system more resilient, and reduce reliance on a fragile banking system. There is significant potential in the domestic bond market as many enterprises have already issued in the market. However, local currency instruments are under-developed, reflecting the wider substitution of foreign currency in the financial system, and pricing and allocation of such bonds has been largely on non-market terms


Newsletter Issue 65 | July – August 2020

Current trends in the ICT sector: Pandemic as opportunity?

After the Belarusian ICT sector had already undergone impressive development in previous years, the current COVID-19 crisis has further accelerated this trend: in the first seven months of the year, the ICT sector’s share in GDP reached 7.6% – significantly higher than in the previous year (6.2%). A key factor is the sector’s strong export orientation, which generated total revenues of USD 2.4 bn in 2019 (equivalent to 25% of total service exports).


Newsletter Issue 64 | May – June 2020

COVID-19 pandemic glooms economic outlook

After a significant slowdown in 2019, the Belarusian economy slides into recession in 2020. The projected decline in real GDP of 6% mainly reflects the influence of external factors: globally low energy prices and other repercussions of the COVID-19 pandemic, but also renewed problems with oil supplies from Russia and the continuation of the Russian tax manoeuvre. The latter is steadily increasing the pressure on the national budget and leaves little room for any public stimulus packages. The depreciation of the currency and rising wages in the run-up to the presidential elections in August 2020 imply substantial challenges to the National Bank; nevertheless, inflation remains well under control. Debt repayments and foreign exchange interventions have diminished FX reserves, implying additional risks against the background of a deteriorating current account. We expect the economy to recover in 2021, but this will not fully compensate for the losses in 2020.


Economic Monitor Issue 12 | June 2020


  • Due to the COVID-19 pandemic, the economy is forecast to shrink by 6.0% in 2020. In 2021, real GDP will grow by 3.5%
  • The main negative impact comes from the external side, where oil-related problems with Russia and low global energy prices reinforce the shock. Contrary to most other countries, domestic lockdown measures are rather weak
  • Inflation remains under control (2020: 6.5%), and the National Bank continues to cut the key interest rate. Real wages keep growing in the run-up to the presidential elections
  • All the factors mentioned put pressure on the budget: balance will deteriorate significantly in 2020 to -4.6% of GDP. Correspondingly, the debt ratio will jump in 2020 (59.6% of GDP)
  • The exchange rate weakened significantly during 5M 2020 (-14.5%), and the national bank had to sell foreign exchange reserves (latest: USD 7.9 bn); import coverage dropped to 2.6 months
  • Current account deficit will widen in 2020 (-2.9% of GDP), before improving slightly in 2021 (-2.5%)
  • External trade will take a hit in 2020, as both exports (4M 2020: -19.1%) and imports (-20.6%) shrink among the global COVID-19 crisis, the energy dispute with Russia and low global energy prices

Newsletter Issue 63 | March – April 2020

The economic impact of the Russian oil tax manoeuvre

While most observers focus on the current turmoil in global oil markets and the resulting steep price decline, Belarus is currently facing an additional challenge. By the end of 2024 the price of oil imported by Belarus from Russia will increase by 30% due to a reform of oil taxation in Russia – the so-called “Russian tax manoeuvre”. It is clear that the manoeuvre will have a significant impact on the Belarussian economy – especially on its oil refineries which contribute significantly to exports and budget revenues. An analysis by GET suggests that the main impact will stem from increasing prices for fuels on the domestic market as refineries pass on the higher cost of oil which is bad news for private households and companies alike.


Technical Note 01/2020

Central counterparties in securities trading: Preconditions, costs, and potential benefits for Belarus (Russian version)


Newsletter Issue 62 | January – February 2020

Economic growth continues to slow down

Economic growth slowed down significantly due to external factors and amounted to only 1.2% in 2019. High uncertainty about future supply conditions for Russian crude oil and gas, as well as ongoing structural problems, further dampen future growth prospects: the forecasts for 2020 (0.9%) and 2021 (0.5%) remain at a similarly low level.


Economic Monitor Issue 11 | January 2020


  • Investment study: Identification of 35 proposals by German businesses to improve investment climate in Belarus
  • New initiatives to support SMEs: New approaches for financial SMEs support are being discussed as part of a new reform agenda. Focusing growth-oriented SMEs appears to be reasonable.
  • Agricultural exports: Exports of products of animal origin are heavily concentrated on the Russian market. Diversification encouraged, especially dairy products have potential.

Policy Paper 03/2019

Designing SME support programs: International experience and implications for Belarus

To date, SME support in Belarus has mainly consisted of concessional loans. The Belarusian government now wants to put SME supporton a broader footing and, above all, to include non-financial support instruments such as training and advisory services in its range of support offers.

Since the reorganization of SME support is beginning from scratch, Belarus has the opportunity to take account of international experienceand lessons learned.


Policy Paper 02/2019

The concept of entrepreneurship in the regulative frameworks of Germany and Belarus

Belarus has recently adopted some reforms that simplify and liberalize the registration of a number of economic activities.

We compare and assess the recent reforms with the concept of entrepreneurship in the German law with a special focus on

  • Permission and registration requirements and
  • The legal status of natural persons, who carry out economic activities.

Policy Paper 01/2019

Improving the Funding of Export Transactions

Export Promotion is a proven and valuable instrument for strengthening a Nation’s export performance. Through export promotion national companies gain experience in tackling international markets, they can improve their international competitiveness, attract export finance and get protection against the risk of non-payment of foreign contract partners. However, the design of an export promotion scheme needs to be done with caution, because many domestic and international aspects must be taken into consideration. For Belarus, not (yet) being a WTO member, the WTO Agreement on Subsidies and Countervailing Measures (ASCM) nevertheless should be an important benchmark concerning the ultimate borderline for state supported export finance and export credit insurance. Not only internationally, but also domestically aspects of protection of competition and avoidance of corruption and unfair business practices need to be considered.


Newsletter Issue 61 | November – December 2019

Belarus-Russia: Is bilateral integration happening?

Since December 2018, Belarus and Russia have been in talks over the prospects of deepening their bilateral integration. The negotiations have taken place behind closed doors and provoked all sorts of rumours and fears in Belarus and the West. While difficult talks continue, the authorities in Minsk stress that national sovereignty is an absolute value and a “red line”.


Technical Note 04/2019

Оценка экспортного потенциала определенной категории товаров на отдельных рынках


Newsletter Issue 60 | September – October 2019

Improving the business climate – Proposals from business

After the recession in 2015/2016, the Belarusian economy is back on a growth path. Nevertheless, more growth and investment of the private sector is required if Belarus is to catch up with the advanced economies. A joint study of GET Belarus together with three German business associations presents 35 proposals from German businesses on how to improve the business climate and unlock more private investment in Belarus.


Newsletter Issue 59 | July – August 2019

External factors dampen economic growth

Due to external factors, the economic development is once again losing momentum. The forecast for 2019 has been revised downwards once again and now stands at only 1.8%. One of the main reasons for this is the pollution of the “Druzhba” oil pipeline, which has a negative impact on the production and export of oil products. The growth forecast for 2020 remains even weaker at 1.3%.


Newsletter Issue 58 | May – June 2019

Banking sector weighed down by legacy of state-led lending

Belarus’ banking sector continues its recovery from the 2015-16 recession. Overall credit has again been growing since late 2017, with credit allocation shifting towards households and private enterprises. As the exchange rate stabilized and inflation has come down, local currency interest rates have markedly declined, encouraging a shift of deposits and lending into local currency. At the same time, it is still not clear that the sector is equipped to support further growth in the economy, and the long-overdue structural change towards private enterprises. In this regard, the legacy of delinquent loans of state-owned enterprises still needs to be resolved, and will require broader governance reform in the corporate sector. In this transition capital markets could become a more important source of funds.


Newsletter Issue 57 | March – April 2019

Belarus-Russia: where are current tensions leading?

Like many times before, Belarus and Russia are disputing the terms of their special relationship. However, geopolitics and Russia’s oil tax manoeuvre have made current tensions more serious by aggravating fundamental contradictions between the allies. Belarusian- Russian relations await bumpy times ahead, with their future depending on whether Minsk and
Moscow will manage to find a mutually beneficial alliance model in the new geopolitical reality.


Newsletter Issue 56 | January – February 2019

Economic recovery continues, but loses steam

The Belarusian economy continued to recover in 2018 (3.0%), with 2.4% growth forecast for 2019. The recovery, however, is cyclical in nature and already beyond its peak. Without any further economic reforms, medium- term growth is likely to remain capped at around 2.0% per annum.


Newsletter Issue No. 55 | November – December 2018

The digital economy in Belarus: a liberal enclave

The information and communications technology (ICT) sector in Belarus has established itself as a significant source of employment, export revenues and innovation. This is a welcome source of dynamism, as the reform of state-owned manufacturing industries has not progressed significantly.


Newsletter Issue No. 54 | September – October 2018

How can Belarus benefit from the Belt and Road Initiative?

Since the announcement of the Belt and Road Initia-tive (BRI) in 2013, the role of Belarus as an important transport gateway that links China with the EU be-came even more pronounced. How can the country benefit from the initiative and what are the implica-tions for the economy?


Technical Note 03/2018

Оценка экспортного потенциала товаров на заранее определенных рынках


Policy Paper 03/2018

Diversification of Belarusian Exports: The Potential of the DCFTA-Countries Ukraine, Moldova and Georgia

Belarus is an open economy, with exports running at above 50% of GDP. The Russian Federation accounts for about half of Belarus’ total exports of goods. A diversification of Belarus’ exports to other markets would be a well-founded policy goal, increasing export sales and reducing the vulnerability to external shocks.


Newsletter Issue No. 52 | May – June 2018

Belarus exports: new opportunities on traditional markets

Belarus is an open economy with exports exceeding 50% of GDP. However, about half of Belarus’ exports go to the Russian market. As such, regional diversification of exports has become one of the key priorities of economic policy.


Newsletter Issue No. 51 | March – April 2018

Belarus-EU: growing cooperation without breakthroughs

Whereas in 2016 Belarus-EU relations saw progress on political matters with little economic effects, the year 2017 and the beginning of 2018 registered the opposite trend: Minsk and Brussels remain stuck in negotiations on landmark political issues, but demonstrate good dynamics in sectoral dialogues and project cooperation. Moreover, after a serious decline in 2015-2016, trade between Belarus and EU member states is on the rise.


Policy Study 02/2018

Diversification of Belarusian Exports: The Potential of Machinery Exports on Non-Traditional Markets

Belarus is an open economy, with exports exceeding 50% of GDP. Within the basket of export goods, machinery and equipment exports play an important role. In 2017, they amounted to USD 5.3 bn, which implies a share of 18% in total goods exports. Vehicles are the largest category of Belarus machinery exports, accounting for 43% of total. This includes vehicles for the transportation of goods, tractors and motor cars. However, the geographical structure of machinery exports is – in line with the overall export structure – highly concentrated. Belarus’ traditional export destinations are the Eurasian Economic Union EAEU (including the Russian Federation), the CIS (outside the EAEU) and to some extent the EU. Taken together, these markets absorb a whopping 93% of Belarusian machinery exports.


Newsletter Issue No. 50 | January – February 2018

Banking Sector: Gradual improvement, but challenges remain

The banking sector in Belarus mirrors the overall economic picture: After some rather difficult years 2015-2016, when credit extension was shrinking, the interest rates were very high, and the level of bad assets was rapidly increasing, some stabilisation and recovery has gained pace.


Policy Study 01/2018

Strategic Options to Improve the Effectiveness of Investment Promotion Agencies (IPAs)

Not only competition between locations, but also between IPAs has significantly increased in the recent past. Taking into account international best practice, this policy study assesses strategic options to increase the effectiveness of IPAs in a competitive landscape.


Technical Note 02/2017

Linking international central securities depositories (ICSD) with local central securities depositories (CSD): Additional information


Policy Paper 03/2017

Competition law enforcement: German experience and relevance for Belarus

Understanding the principles, the structure and organizational design of competition law enforcement in Germany could be of interest for Belarus as it is currently drafting its competition development program.


Policy Paper 02/2017

Recommendations for reforming the SME Definition in Belarus

The classification of small and medium-sized enterprises (SME) in Belarus is inappropriate. Consequently, the official statistical research and publications do not provide reliable data for policy makers, which hinders the development of efficient SME policy. We therefore recommend reforming the legislation that stipulates the SME definition.


Policy Paper 01/2017

Resolving Non-Performing Loans: Selected International Experience

Belarus is faced with a rapidly rising level of non-performing loans (NPLs) in its banking sector. This is not a unique feature; many countries in the world have experienced similar developments as NPL cycles are quite a regular feature of many financial systems around the globe. However, international experience also shows that high levels of NPLs pose a danger to financial and economic stability, and thus need to be comprehensively addressed by policymakers. A bank’s high NPL stock depresses its earnings as it generates less interest income, requires loan-loss recognition and increases operating costs related to NPLs’ management and work-out. Operating costs could be significant as the relevant skills are in short supply within the banking industry. Lack of profitability reduces the capital generated within banks, raises funding costs, and depresses credit growth. Credit will be constrained by all banks, impacting both healthy and distressed private sector borrowers.