EDB raises forecast for Belarusian GDP growth in 2024 to 3.4% from 2%

MINSK. June 25 (Interfax) - The Eurasian Development Bank (EDB) has raised its baseline forecast for GDP growth in Belarus this year to 3.4% from 2% in light of strong growth in key sectors and the expansion of domestic demand in Russia, the bank said in a bulletin on the economies of member countries.

"The forecast has been raised by 1.4 percentage points in light of the strong results of the first quarter, the growth of household consumption and the improvement of the forecast for the Russian economy. The continued expansion of domestic demand in Russia will make it possible to support higher than potential GDP growth in Belarus. The strong growth of real household incomes will stimulate consumer activity," the report said.

As domestic demand in Russia cools, Belarusian economic growth will also slow to 1.1% in 2025 and 1.3% in 2026, the EDB said.

Given the extensive government regulation of prices in effect in Belarus, inflation in the country will be 6% this year and then accelerate to 6.8% in 2025 and 7.7% in 2026, the bank forecast.

The main risk for the Belarusian economy is a drop in world oil prices, which would lead to a significant contraction of the country's GDP, the bank said.

"The influence will be indirect through the deterioration of the economic situation in Russia, which will become a factor in the contraction of demand for Belarusian goods on the Russian market. Given the extremely limited possibilities for reorientation to other markets, this will lead to the contraction of industrial production in Belarus," the report said.

Belarusian GDP grew by 3.9% in 2023, slightly more than the targeted 3.8%, after shrinking by 4.7% in 2022. The country's statistics agency, Belstat reported that GDP grew by 5.2% in the first five months of 2024.

The World Bank, International Monetary Fund and European Bank for Reconstruction and Development expect economic growth in Belarus to slow to, respectively, 1.2%, 2.4% and 2.8% in 2024. The Belarusian authorities have approved a target forecast of 3.8% for GDP growth this year.