MINSK, November 2, 2018
Belarus’s economic recovery, which started in 2017, has remained robust in 2018, according to the latest World Bank Economic Update for Belarus. However, further structural changes are needed to improve external competitiveness and to convert the ongoing recovery into structural growth, says the report.
In the coming years, the pace of economic growth is expected to slow down to around 2–2.5 percent, while the economy continues to face challenges caused by its public debt position and external market volatilities. Although slower growth may ease balance of payments pressures, the fiscal position is expected to deteriorate in the wake of the “tax maneuver” by Russia — a gradual phasing-out of oil duties collected by Belarus.
“The cyclical recovery of 2017-18 is encouraging, but we are not yet seeing an acceleration of the underlying structural growth rate needed to satisfy aspirations for higher incomes”, says Alex Kremer, World Bank Country Manager for Belarus. “Belarus should address structural weaknesses, especially in the State-Owned Enterprise sector, and ensure that the private sector really feels the benefit of new business regulations”.
The Special Topic of the Economic Update for Belarus expands upon recent World Bank studies about distributional inequalities in the Europe and Central Asia region and inter-generational mobility across the world.
“While Belarus is not experiencing rising overall inequality, there are spatial disparities in welfare and lower intergenerational mobility”, says Kiryl Haiduk, World Bank Economist. “Going forward, Belarus’s economic development will continue to be regionally uneven. Attempts to direct the location of firms are usually ineffective and expensive, so vulnerability and inequality could be reduced by means of geographically-neutral policies, including, for instance, strengthened targeted social assistance programs”.
Since the Republic of Belarus joined the World Bank in 1992, lending commitments to the country have totaled US $1.7 billion. In addition, grant financing totaling US $31 million has been provided, including to programs involving civil society partners. The active investment lending portfolio financed by the World Bank in Belarus includes eight operations totaling US $789 million.