Belarus Economy Monitor

We publish brief conclusions: 

Belarus’ GDP grew by 1.1% in Q2-2025 YoY after an increase of 3.2% YoY in the previous quarter. Output volume remained at a historical peak and significantly exceeded its balanced level. In such conditions, the unemployment rate fell to a new historical low of 2.6% of the labor force in Q2-2025, and the deficit in foreign trade in goods and services remained significant.

Domestic demand slowed in Q2-2025 but remained high. The weakening of household lending under the influence of the National Bank’s directive restrictions, a decline in consumer confidence and high uncertainty about the demand outlook on the Belarusian and Russian markets restrained consumer and investment activity.

Overheated domestic demand and labor market exerted upward pressure on prices. Inflation rose to ≈10–11% QoQ in Q2-2025 (annualized quarterly price growth, seasonally adjusted). Economic policy did not demonstrate a clear focus on combating economic overheating and high inflation.

The economy will “cool down” slowly in the medium term in the absence of strong external shocks. The return to equilibrium is expected to be prolonged, as the degree of overheating in Q2-2025 remained close to record levels since 2014, and overall not a tough economic policy will continue to support a high level of domestic demand. Nevertheless, economic activity growth will weaken, as there are insufficient resources for a significant increase in stimulus, and demand in Russia has completed its active growth phase and entered a corrective “cooling” phase. GDP growth is forecast to be near 2% in 2025, followed by a slowdown to 0–1.5% in 2026. 

Inflation is moving toward the upper bound of the 7–9% YoY forecast for the end of 2025. At the same time, the tolerance threshold of the Belarusian authorities for rising inflation is not sufficiently predictable. The approach of price growth to double-digit rates and growing public concern over it may lead to restoring the priority status of inflation containment in economic policy, although it is not assumed in the baseline scenario.

Risks to the baseline scenario remain high both from domestic economic policy and external conditions. The U.S. sanctions policy toward Russia and Belarus, and especially its impact on the economies, is highly uncertain. There is a tangible probability not only of tightening sanctions but also of easing them, which would support higher “healthy” economic growth in Belarus in 2026 compared to the baseline forecast.