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Dmitry Chervyakov

Rising inflation endangers macroeconomic stability

Belarus is facing a sharp rise in inflation, which may affect the country’s economic stability.

  • Belarus
NL 71 | July - August 2021
Macroeconomic Analyses and Forecasting

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.

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