We have revised down our forecast for GDP growth in Belarus, as Russia � Belarus main trading partner � will remain in contractionary territory in ----, weighing on the outlook for Belarusian exports. Belarus will remain highly exposed to Russia, its main trading and investment partner, and the weak outlook for Russian growth in ---- has prompted us to adjust our forecast for Belarus as well. ...As such, we have revised down our forecast for real GDP in Belarus to contract by -.- in ----, having previously expected an expansion of -.- , before the economy returns back to positive growth territory in ---- of -.- . Factored in our forecast is our Oil & Gas team s forecast for oil prices to remain almost at half the price seen in previous years, which will weigh on public sector revenues and underpin fiscal belt-tightening by the authorities in the coming quarters despite the sizeable FX adjustment that mitigated partially the impact on the budget. Public revenues over the previous decade benefitted immensely from the difference between the discounted price at which Belarus imports crude oil and gas from Russia, and the market price at which it re-exports the refined products. ...As such, consumer purchasing power will remain subdued. In addition, BYR weakness will also exacerbate the burden of
...Source: BMI, Ministry of Statistics previous, as the liberalisation of the exchange rate regime from pegged to managed float will likely contribute to a refinement of the monetary authorities policy instruments and better control over consumer price growth. ...The modest share of public consumption masks the large state footprint in the economy, as the state support to state-owned enterprises can be in the form of off balance sheet and/or directed lending, which entails cheap loans to economically imports sectors. Gross Fixed Capital Formation: Fixed investment will slightly decrease its share of GDP to -- of GDP by ---- from --.- in ----, reflective of our subdued outlook on Belarus prospects of diversifying away from its dependence on commodity exports, and reorienting towards an investment and higher value-add export based economic model. Net Exports: We forecast Belarus external sector to remain a drag on headline GDP growth over the coming decade, due to the sizeable trade deficit of the country. ...Our forecast for imports to remain a big component of GDP by expenditure reflects Belarus underdeveloped economy, which necessitates importing capital and consumer goods, and its subdued prospects of boosting its productive capacity and rising up the value chain of production.
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