October 2023. Republic of Belarus: Social and Economic Development in the first half of 2023 and medium-term prospects

In the first half of 2023, the Belarusian economy experienced a recovery growth. One of the main growth factors was the activation of domestic demand, supported by a noticeable increase in real wages, significantly outpacing labor productivity growth, and an acceleration in consumer lending. Inflation in the first half of 2023 continued to slow down under the influence of moderate inflation in the Russian Federation, the appreciation of the Belarusian ruble against the Russian ruble, and a decrease in inflation expectations in conditions of maintaining the price regulation system. The growth of domestic demand and imports, as well as the increase in some tax rates since the beginning of 2023, contributed to a significant improvement in the fiscal parameters of the Republic of Belarus and the transition of the budget balance to a positive zone. The recovery of domestic demand, which caused a rapid increase in imports, as well as a faster decline in export prices compared to import prices, against the background of a significant weakening of the Russian ruble against the US dollar, led to a considerable reduction in the foreign trade surplus and the transition of the CAB balance to a negative area.

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