Economic growth slows down
The Belarusian economy experienced solid growth of 4.0% yoy in 2024, driven primarily by strong private consumption. For 2025, the IMF forecasts slower growth of 2.8% yoy, which is confirmed by developments in the first months of the year, and explained by fiscal, industrial, and labour supply constraints as well as Western sanctions. Inflation remains relatively stable and is projected to reach 5.5% yoy by the end of 2025, although the figure is distorted by price controls. On the fiscal side, Belarus maintains a budget surplus, which is attributed to a limited capacity to fund itself on international markets. This development results in increasing reliance on financial assistance from Russia. Moreover, trade with the EU has collapsed while it remains stable with Russia. Finally, increasing dependency on Russia is also evident in the energy sector, where the energy supply is almost entirely based on (imported) fossil fuels, electricity production is shifting away from gas towards nuclear, increasing the need of nuclear fuel imports from Russia. Overall, the economy is geared towards stagnation, while the economic dependency on Russia continues to grow.
Solid growth in 2024, but weaker outlook ahead
Belarus’ economy grew by 4.0% in 2024, mainly driven by private consumption (+12.6% yoy) sustained by continued wage increases and consumer lending. However, this strength of private consumption was not mirrored by other demand components. Investment increased only moderately, while government spending stagnated due to borrowing constraints.
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In 4M2025, the economy continued to grow more mod-erately at 2.8% yoy; confirming the expected slowdown for the full year 2025.
Construction dominates supply side dynamics
On the supply side, construction continues to lead sectoral growth with 11.4% yoy for 4M2025, largely driven by government-led import substitution programmes and supply chain adjustments in response to imposed sanctions. The ICT sector shows signs of recovery with 5.5% yoy growth, after experiencing a strong decline of 14.2% yoy in 2023 and meagre growth of 1.8% yoy last year. Sanctions, logistical, and labour supply constraints continue affecting the industry sector. Industrial production, after experiencing strong growth in 2024, grew by just 1.2% yoy in 4M2025. Similarly, the build-up of industrial production inventories accelerated from 50% in Dec-2024 to 66% in Apr-2025, further indicating an economic slowdown.
Price controls hide rising cost pressures
Official inflation stood at 6.5% yoy in April 2025 but the true inflation is estimated to be closer to 10% (esti-mates by the think tank BEROC), once the impact of continued price controls is accounted for. These controls are distorting market signals, negatively affecting retailers and producers, but at the same time shield consumers. In fact, real wages continued to rise over the last three years, driven by persistent labour short-ages and low official inflation, though growth has slowed more recently.
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Fiscal and external balances stable at first glance
Belarus is expected to maintain a fiscal surplus for the third year in a row, projected at 0.2% of GDP in 2025.
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The seemingly solid financial position is, however, quite fragile as it is driven by a limited access to international capital markets, making Belarus more reliant on Russian financial support and domestic austerity. As a result, public debt is forecast to remain at 43% in the short-term (IMF WEO, 2025). On the external side, the current account deficit is stable at around 2.5% of GDP but is expected to widen further to 2.8% in 2025, driven by an increasing trade deficit. The Belarussian Rouble recently appreciated against the US-Dollar (14% between Jan-25 and Jun-25) but depreciated against the Russian Rouble (10%). Foreign reserves grew to USD 10.9 bn in April 2025 as gold prices (51% of reserves) are rising. However, the National Bank faces limited room for manoeuvre due to sanctions.
Trade more concentrated towards Russia and China
Belarus’ goods trade structure is increasingly oriented toward Russia and China, while the EU and other non-CIS markets continue to fade in relevance. In 2024, Rus-sia and China accounted for 93% of the external trade share (goods and services), compared to 69% in 2021. Notably, imports from the EU fell sharply, especially in transport vehicles, and machinery, due to the tightened sanctions enforcement and a deliberate push toward rerouting trade flows via Russia.
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The overall goods trade deficit of 8% of GDP (2024) is expected to expand, as reflected by stagnating exports combined with rising import demand for consumer and capital goods.
Economic dependency mirrored in the energy sector
Belarus’ energy system remains strongly fossilfuel based, highly inefficient and dependent on imports from Russia. In 2024, natural gas and oil accounted for 83% of total primary energy supply. The role of renewables re-mains negligible, accounting for only 0.3% of primary supply, with no significant expansion planned. Moreover, the stagnating energy policy is underscored by a high energy intensity level compared to peer countries, which has not substantially decreased since 2013. A more meaningful shift has taken place in the electricity production, with the commissioning of the new nuclear reactor unit Astravets 2, which increased the share of nuclear power to 36% of electricity generation. However, nuclear fuel is sourced from Russia, reinforcing rather than reducing Belarus’ dependency.
Outlook
Private consumption has so far sustained Belarus’ economy, but the macroeconomic environment is becoming more precarious. The IMF forecast of 2.8% growth is an optimistic scenario in comparison to most international forecasts that see even lower growth for 2025, with a further slowdown to less than 2.0% growth in 2026. Overall, Belarus risks approaching a low potential growth path with a strong dependency on Russia.
This newsletter is based on the “Economic Monitor Belarus”.
