Belarus Risks Prolonged Period of Slow Growth

Economic growth slowed sharply in 2019, as exports fell and sectoral recovery dissipated, says the World Bank’s latest Economic Update for Belarus, released today. The World Bank has revised its growth forecast slightly downwards, based on expectations of a weak external environment, limited space for demand stimulus, and uncertainties surrounding the outcomes of Belarus-Russia economic integration and bilateral financial support.

“The expected period of slow growth could be shortened, however, if the foundations for accelerated recovery are put in place without delay,” said Alex Kremer, World Bank Country Manager for Belarus. “Some essential steps have already been taken, such as maintaining macroeconomic stability and lowering inflation. However, more actions are required in the areas of state-owned enterprise restructuring, financial sector reform, and better targeting of social protection.”

The Economic Update also summarizes findings from the recent Business Environment and Enterprise Performance Survey (BEEPS) for Belarus, conducted jointly by the World Bank and the European Bank for Reconstruction and Development in 2018. The survey focuses on businesses’ perception of factors that can be helpful or constraining for private firms.

“Improvements in the business environment, implemented since 2008, have helped the private sector to expand. Results of the survey confirm that private companies find the domestic business environment more favorable,” said Kiryl Haiduk, Belarus Country Economist at the World Bank. “However, access to finance is still perceived as a constraint. Experience shows that government credit schemes have limited impact, while more systemic measures that enable funds to be channeled from lenders to borrowers can help alleviate the credit constraints facing businesses.”

Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled $1.9 billion. In addition, the country has received grants in the total amount of $31 million, including to programs involving civil society partners. The active investment lending portfolio financed by the World Bank in Belarus includes nine operations in the total amount of $942.7 million.