Belarusian Economic Research and Outreach Center

Perspective and Challenges for Belarus’ Economy in the Medium-Run (2018-2020)

This policy paper deals with the perspectives of the national economy development in 2018-2020. The study emphasizes that fluctuations around equilibrium growth rate is the most likely scenario. The study uses the estimate of 2.5% of equilibrium growth rate for Belarus, which is a compromise among different approaches and methodologies. The scenario of higher growth may become possible due to positive external shocks. However, even in case of permanently strengthening external environment, the growth rate of the national economy is still likely to be unsustainable. In case of growth rate close to the equilibrium one and stabilizing inflation expectations, monetary environment is likely to stabilize as well. If that a case, inflation rate will be close to the rate targeted by the National bank, while base (interbank) interest rate will be within a corridot of 7-11% per annum. However, expanding domestic demand will generate more impulses for price growth. Hence, restricting inflation closely to the targeted values will require more efforts (in comparison to 2017) from the National bank. The paper admits that a high level of debt burden, buy non-financial firms and the government, makes them sensitive to adverse shocks. In turn, close ties among different debts causes a risk of a full-fledged debt crisis for Belarus. Such scenario is a key medium-term threat for the country.

The Policy Paper is available only in Russian.