Economy of Belarus

The economy of Belarus is an upper-middle income mixed economy. As a post-Soviet transition economy, Belarus rejected most privatisation efforts in favour of retaining centralised political and economic controls by the state. The highly centralized Belarusian economy emphasizes full employment and a dominant public sector. It has been described as a welfare state practicing market socialism. Belarus is the world's 74th-largest economy by GDP.
, Belarus ranks 53rd from 189 countries on the United Nations Human Development Index, and appeared in the group of states with "very high development". With an efficient health system, it has a very low infant-mortality rate of 2.9. The rate of doctors per capita is 40.7 per 10,000 inhabitants and the literacy rate is estimated at 99%. According to the United Nations Development Program, the Gini coefficient is one of the lowest in Europe.

Economic background

Before the October Revolution, Belarus was a relatively backward and underdeveloped country, heavily reliant on agriculture and with rural overpopulation, although it experienced a rapid economic and industrial growth after the construction of railways in the late 19th century (with Minsk, Vitsebsk, Hrodna, Pinsk and Homel becoming significant industrial centres. The Second World War devastated Belarus, which lost about a quarter of its population and suffered immense destruction of infrastructure. In the post-war years, Belarus rapidly industrialised and became an important trade hub between the Soviet Union and Europe. Manufacturing became a pillar of its economy emphasising tractors, heavy trucks, oil processing, metal-cutting lathes, synthetic fibres, TV sets, semi-conductors and microchips. In the 1980s, more than half of the industrial personnel of Belarus worked for enterprises with over 500 employees. Among the Soviet republics, it had an unusually high export rate of its products, about 80%, and was the most technologically advanced. Because of its role as a producer of products made from raw materials imported from the Soviet Union, Belarus was called "the Soviet assembly shop".
Since the disintegration of the Soviet Union and under Lukashenko's leadership, Belarus has maintained government control over key industries and eschewed the large-scale privatizations seen in other former Soviet republics.
The period between 1996 and 2000 was also characterised by significant financial distress, in particular in 1998 and 1999 as a result of the financial and economic crisis in Russia. This resulted primarily in a sharp increase in prices and the devaluation of the national currency, a decline in trade with Russia and other CIS countries, growth in inter-enterprise arrears, and overall deterioration of the country's balance of payments. Extreme tension within the foreign exchange market was the key factor that destabilized the economy in 1998 and 1999. In 1999, consumer prices grew by 294%.
Between 2001 and 2005, the national economy demonstrated steady and dynamic growth. The GDP grew at an average rate of 7.4 percent, peaking in 2005 at 9.2 percent. This growth was mainly a result of the performance of the industrial sector, which grew on average more than 8.7 percent per year, with a high of 10.4 percent in 2005. Potatoes, flax, hemp, sugarbeets, rye, oats, and wheat are the chief agricultural products. Dairy and beef cattle, pigs, and chickens are raised. Belarus has only small reserves of petroleum and natural gas and imports most of its oil and gas from Russia. The main branches of industry produce tractors and trucks, earth movers for use in construction and mining, metal-cutting machine tools, agricultural equipment, motorcycles, chemicals, fertilizer, textiles, and consumer goods. The chief trading partners are Russia, Ukraine, Poland, and Germany.
The Belarus GDP grew 9.9% in 2006. In the first quarter of 2007, GDP grew 8.2%. GDP further grew in 2008 by 10%.
Analysis of foreign direct investment to Belarus between 2002 and 2007 shows that nearly 80% of FDI was geared into the service sector, while industrial concerns accounted for 20%. Agricultural FDI was negligible at 1%.

Crisis of 2011

Shortly before the 2010 presidential election, average salaries in Belarus were increased by the government to $500 per month. It is believed to be one of the main reasons for the crisis in 2011. Other reasons for the crisis were strong governmental control in the economy, a discount rate lower than inflation and the budget deficit.
In January 2011, Belarusians started to convert their savings from Belarusian rubles to dollars and euros. The situation was influenced by rumors of possible devaluation of the ruble. Exchange rates in Belarus are centralized by the government-controlled National Bank of Belarus. The National Bank was forced to spend $1 billion of the foreign reserves to balance the supply and demand of currency On March 22, it stopped the support to banks. The National Bank also didn't change the exchange rate significantly, so the increased demand of dollars and euro exhausted cash reserves of banks. In April and May 2011, many people had to wait for several days in queues to buy dollars in the exchange booths. In April, Belarusian banks were given informal permission of government to increase the exchange rate to 4,000 BYR for 1 dollar, but few people started to sell dollars and euro. On May 24, the ruble was officially devalued by 36%. But the shortage of the currency retained. As a result of the shortage, a black market of currency was created. In July 2011, the black market exchange rate was nearly 6,350 BYR per 1 dollar, in August, it reached 9,000 BYR per 1 dollar.
In September 2011, National Bank of Belarus introduced a free exchange market session to determine a market value of the ruble. From November 2011 to March 2012, the exchange rate was per dollar, but it started to rise in April 2012 and reached per dollar on 10 July 2012.
Recovery from the crisis was difficult due to isolation of the Belarusian government from the EU and US.
The crisis strongly affected the economy. Inflation reached 108.7% in 2011. Average salary decreased from $530 in December 2010 to $330 in May 2011. In May 2012, the average salary reached $436. Refinancing rate rose from 10.5% in December 2010 to 45% in December 2011 and fell to 32% in June 2012. In November 2011, interest rates of several banks reached 120% in rubles.

2015 unemployment regulation

In April 2015, Alexander Lukashenko signed a bill on which introduced a fine on unemployed population, among other restrictions. This law obliged all citizens who were paying direct taxes less than 183 days every year to pay a fee in the size of 20 basic amounts. Mass media compared the bill with a struggle with "тунеядцы", or social parasites, in Soviet Union. Several categories of people were exempt from paying the fee: parents with a child under 7 years old, disabled persons, students, those who were officially registered as unemployed, etc. Avoiding the payment was punished by fines, administrative arrests and. In January 2018 the fine was abolished.

2020 COVID figures

The Belarusian economy was relatively less impacted by the COVID-19 pandemic, caused by relatively light and delayed COVID-19 lockdown and quarantine measures. Professor Victor Sayevich said in September 2020 that Belarus suffered a decline in economic figures of between 1.5% and 2%, whereas European countries sustained drops around 12%. Contemporaneous political unrest and increased state repression also negatively impacted the economy.

2022 Russian invasion of Ukraine via Belarus

In April 2022, as a result of its facilitation of the Russian invasion of Ukraine, the EU imposed trade sanctions on Belarus. The sanctions were extended and expanded in August 2023. These sanctions are in addition to those imposed following the 2020 Belarusian presidential election, which was widely criticized by western observers.

Data

The following table shows the main economic indicators in 1990–2023 and future estimates by the IMF. Inflation below 8% is in green. Data for the government debt for the years 2003 and earlier are based on the IMF country reports from 2003 and 2005.

Labour market

Wages

Following the collapse of the Soviet Union, salaries in Belarus experienced a sharp decline and remained stagnant until the 2000s. The subsequent decade saw a rapid increase in wages, but this growth was not supported by a corresponding rise in productivity, contributing to economic crises, including one in 2011. After another period of stagnation throughout the 2010s, salary growth has resumed in the 2020s.

1990	1995	2000	2005	2010	2015	2020	2024
310.9	65.5	60.2	218.0	413.0	420.7	512.1	700.8

Belarus shows relatively little variation in wages across employment sectors, with the exception of a significant rise in salaries within the Information and Communication Technology sector during the 2010s.

	1990	1995	2000	2005	2010	2015	2020	2024
Industry	104.5	114.1	120.3	108.1	107.7	102.2	99.5	109.4
Agriculture and Forestry	93.3	62.0	62.4	58.0	68.7	73.4	72.8	80.7
Trade	86.2	80.4	80.3	74.4	86.1	92.3	87.6	91.8
Education	71.9	78.7	76.2	83.8	73.6	72.9	71.7	68.8
Construction	123.8	138.8	126.7	124.3	122.8	112.4	104.6	117.8
Transport	110.8	123.9	108.4	112.1	106.8	100.3	89.0	99.5
Information and Communication	83.3	121.8	108.4	112.1	143.1	235.2	319.4	248.5

Wages across different regions of Belarus are quite similar, with the exception of the capital, Minsk. They also do not significantly differ from wages in nearby Russian regions, although the average salary in Russia is generally higher.

	1990	1995	2000	2005	2010	2015	2020	2024
Brest region	91.1	82.8	86.9	88.8	89.4	85.7	84.1	86.9
Vitebsk region	95.5	91.6	90.3	92.8	89.5	86.5	82.8	83.0
Gomel region	105.9	100.1	96.6	98.6	94.7	90.8	86.0	88.1
Grodno region	94.8	90.5	89.5	91.8	90.8	88.2	84.7	87.8
City of Minsk	113.8	133.4	130.4	121.8	126.3	132.1	139.8	132.2
Minsk region	94.8	95.4	99.2	97.5	97.1	99.3	97.5	99.9
Mogilev region	98.5	94.6	90.2	90.8	89.5	86.2	80.5	82.8