Can the Stronghold Withstand the Economic Attack? The Challenges and Prospects of the Belarusian Economy in the Near Future


Over the years, the Belarusian economy has been displaying decent rates of economic growth, while being labelled by international financial institutions and many commentators as a ‘laggard in transition’ with an authoritarian polity and a semi-command economy. Some economic successes had initially appeared as puzzling, but were later accepted and understood. But still, a low share of private sector to GDP and the virtual absence of privatisation along with a slow pace of enterprise restructuring, all imply that Belarus’ economy is far from being a ‘fully-fledged’ market one.

Some commentators explain that economic sustainability is based on the preferential prices for gas and, more importantly, oil that the Belarusian economy consumes and sells abroad (especially refined oil). Also, inefficient enterprises are able to economise on lower energy costs and thus maintain output. The budget has also been capable of collecting revenues to maintain generous social spending, which is presented by the government as a backbone of the ‘Belarusian economic model’. To cut the long story short, what is puzzling is that how the Belarusian economy – contrary to the expectations and predictions based on available interpretations of other countries’ experience – has been able to survive? Would its growth capacity be greatly undermined after gas price hike and imposition of oil duties? What could be expected in the near future? Would there be some major economic crisis? To answer these questions, one has to account for a broader perspective that incorporates not only economic factors, but sheds some light onto the social factors embedded into the Belarusian economic decision-making. The structure of the paper is as follows: in the first section, the economic performance of Belarus is analysed. The second section deals with the challenges of gas price hikes and the imposition of oil duties. The third section discusses policy options available for the authorities and also the likelihood of either policy scenario.

Download full text: economic challengers.pdf
By Yakov Minkov, economist