EDB improves estimate for growth in Belarusian 2023 GDP to 3.9%, with slowdown to 2% expected in 2024

MINSK. Dec 14 (Interfax) - The Eurasian Development Bank (EDB) has significantly improved its estimate of Belarus' GDP growth in 2023 and now expects it to be 3.9% versus the 2.2% forecast in June.

"The Belarusian economy has shown an extremely high degree of adaptability to the operating conditions that changed last year. Based on the results of ten months of this year, the country's GDP grew 3.8%. (...) Internal factors and the preservation of high demand in Russia will continue to support the Belarusian economy in Q4, and GDP growth by the end of 2023 could be 3.9%," the latest review of the economies of the bank's member countries, published on Thursday, said.

Bank experts clarified that the main reason for the revision was stronger external demand from the country's main trading partner, Russia.

The EDB said that economic growth in Belarus would decrease significantly in the next three years. In 2024, GDP growth is expected to be 2%, in 2025, it will be 0.8%, and then 1% in 2026.

"The economy's growth will slow down due to the end of the recovery period and the persistence of restrictions on the supply side - reduced employment, more complex supply chains and access to technology. (...) Meanwhile, exports may weaken in 2024 due to the projected decline in Russian GDP growth, weakening price advantages in the Russian market due to the strengthening of the Belarusian ruble against the Russian ruble and the record level of capacity utilization in industry achieved in September 2023," the bank said.

In their opinion, the growth of Belarus' potential GDP is limited to 1-1.5% per year due to unfavorable demographic trends and restrictions on access to technology. In addition, the influence of the external demand factor on economic growth in Belarus may decrease amid a slowdown in economic growth in Russia and the expansion of its import substitution policy.

EDB analysts also improved the inflation forecast in Belarus this year to 5.2% from the 7.8% which was predicted in June. Meanwhile, they expect consumer prices to rise to 8% next year, which could slow to 7.4% in 2025 and 6.4% in 2026.