Republic of Belarus
Federation of Euro-Asian Stock Exchanges
Economic Development and Outlook
40
Belarus’s cyclical economic recovery has continued, led by growth in consumption and exports. Stronger domestic demand and increased exports helped GDP growth accelerate over six straight quarters to 3.9 percent by the second quarter of 2018. Real wages rose, outpacing productivity growth throughout the second half of 2017 and during 2018, fueling household consumption, which grew by 10.2 percent year-on-year (y/y) in the second quarter of 2018.
Rapid increases in capital spending by local governments (during 2017-18), and in bank lending, reinvigorated investment, which expanded by 7 percent in the second quarter of 2018. As a result, the contribution of domestic demand to GDP growth exceeded that of net exports, which turned negative due to an increase in imports.
On the supply side, growth was driven by a rebound in commodity-intensive industries. More favorable terms of trade with non-CIS countries helped exporters of mineral products, metals and wood to increase both volumes and revenues. In contrast, a mild and volatile recovery in Russia created limited opportunities for increasing exports of manufacturing and agricultural products.
Also, bilateral import restrictions periodically imposed by Russia adversely affected the exporters of dairy products. Meanwhile, financials of the corporate sector continued to deteriorate. In the first half of 2018, profits in manufacturing and construction fell in real terms, while the number of loss-making State-Owned Enterprises (SOEs) in these sectors decreased only marginally.
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