April 2022. Republic of Belarus: Social and economic development in 2021 and medium-term prospective

06 May 2022

In 2021, the key driver of Belarus' economic growth of 2.3% was high external demand attributable to the global economic recovery. Business activity was also supported by stronger household consumption against the background of delayed demand of the previous year and continued growth of real incomes of the population, despite a significant contraction of consumer lending. At the same time, the high uncertainty of the business environment, against the backdrop of sanctions, resulted in markedly subdued investment activity. However, the economic sanctions imposed during the year by a number of Western countries and the United States had a limited impact on foreign trade as they mostly applied only to new contracts.

The recovery of the economic growth in the Republic of Belarus in 2021 contributed to a significant improvement of the fiscal performance and a decrease in the public debt. At the same time, the acceleration of inflation to 10% in 2021 was mainly associated with the impact of non-monetary factors driven by higher external inflation and continuing logistics difficulties in the supply of certain goods.

This macroeconomic review does not include any medium-term forecasts of the key macroeconomic indicators, as they are under revision, taking into account the potential impact of sanctions, imposed on the Russian Federation, on the economy of the Republic of Belarus.