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Dr Alexander Knuth, Robert Kirchner

Economic conditions at mid-year: Light at the end of the tunnel

The Belarusian economy seems to show some signs of recovery: After real GDP decreased by 3.9% in 2015 and experienced another drop by 2.6% in the last year, the first quarter of 2017 showed surprisingly good results (0.3% yoy change). Especially manufacturing profited from the increased external demand.

  • Belarus
NL 46 | 2017
Macroeconomic Analyses and Forecasting

Additionally, the increase and stabilisation of the commodity prices positively contributed to the development. It seems that positive expectations about the solution of the oil and gas conflict with Russia have been another positive factor. The dispute had hampered economic development in the comparable periods of the previous year. This was the case especially in the oil industry, which is of great importance for the country. However, growth projections for the total year 2017 are still negative, as domestic demand remains too weak after incomes have decreased. Even if the economy will finally return to growth in the next year, one should not be too optimistic. The low projected growth of 0.6% is rather of cyclical nature; substantial reforms would be necessary for a real growth trend.

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