Recession over, risks remain: EBRD revises economic growth forecast for Belarus

Belarus’s economy is growing again after two years of recession, the European Bank for Reconstruction and Development says.

The EBRD has revised up sharply its 2017 economic growth forecasts, with higher export levels, a revival in investment and firmer commodity prices supporting a broad-based upswing.

Its experts forecast the economy of Belarus to grow by 1.5 per cent in 2017 and 2.0 per cent in 2018.

In the first nine months of 2017, Belarus’ GDP grew by 1.7 per cent year-on-year, driven by a recovery in external demand, the recent report reads.

In May’s regional economic prospects report, the EBRD predicted the continuation of the recession in Belarus at 0.5% in 2017 and expected the growth to amount to 1% in 2018.

According to the EBRD estimations, the near-term economic outlook has improved due to resolution of the gas price dispute with Russia, agreement to restore crude oil supplies to Belarus to ordinary annual volumes, resumption of disbursements by the Eurasian Fund for Stabilisation and Development and successful placement by Belarus of sovereign Eurobonds for the principal amount of $1.4 bn in June 2017.

“Output in manufacturing, the economy’s largest sector, grew by 6.6 per cent year-on-year. Stabilisation of the exchange rate, weak domestic demand, moderation in wage growth as well as generally conservative macroeconomic policies have all helped to bring the inflation rate down to 4.9 per cent year-on-year in September 2017, which is the lowest level in recent years,” the report says.

At the same time, the authors warn that downside risks remain and the growth prospects continue to depend on the extent of structural reforms.