Belarus Economy Monitor

We publish brief conclusions: 

Belarus’ GDP grew by 0.8% in Q3-2025 compared to Q3-2024, following a 1.0% YoY increase in the previous quarter. The decline in exports amid weakening demand in the Russian market was the key factor behind the slowdown in output dynamics. Domestic demand continued to grow in a non-restrictive policy environment, though at a slower pace than last year. As a result, the economy remained overheated in Q3-2025, but the degree of overheating declined to ≈2.2% of potential GDP due to the weakening of external demand.

Economic overheating is expected to ease in the medium term as GDP growth slows from 1.5–1.8% in 2025 to 0.5–1.5% in 2026. The expected modest growth of the Russian economy – around 1% in 2026 – and the lack of room for substantial domestic fiscal or monetary stimulus will constrain the expansion of aggregate demand. The exhaustion of available labor resources and low efficiency of capital investment will continue to limit growth from the supply side. The demand for labor is likely to weaken amid slower output dynamics, leading to a deceleration in real wage growth from over 10% in 2025 to 1–3% in 2026.

Inflation is projected to remain in the 7–8% YoY range during Q4-2025 – 2026. Domestic demand and increased labor costs will maintain an inflationary impact next year. However, their contribution to price growth will gradually decline as the economy cools. From the external side, a mild disinflationary effect is expected, assuming slower price growth in Russia. If price controls are relaxed or regulated prices rise rapidly amid weakening market inflationary pressure, the reduced contribution of market factors could be offset by the partial realization of accumulated inflationary overhang.

The foreign trade deficit in goods and services is projected to hover around 2% of GDP in 2025–2026. Export prospects remain constrained due to slower demand growth in Russia. Imports will stay high but are not expected to increase significantly as domestic demand overheating decreases. A trade deficit of about 2% of GDP corresponds to a moderate weakening of the Belarusian ruble, which may lose 4–8% of its value against the basket of foreign currencies in 2026.

Risks to the baseline scenario remain high, both from domestic policy and external factors. The threat of intensified sanctions pressure remains relevant, as does the possibility of easing restrictions. There is also a significant risk that domestic demand in Belarus could weaken more sharply than projected in the baseline scenario if a downturn occurs in Russia and Belarusian budget revenues decline. A discretionary, non–rule-based monetary policy also remains a source of uncertainty.