Macroeconomic Forecast for Belarus, №1(14), July 2017
The recovery will continue, but its pace is slow and depends on the consistency of domestic macroeconomic policies, implementation of the agreements on crude oil imports from Russia, and the pace of recovery in Russia.
We expect that the economic authorities will follow the first condition and preserve sound macroeconomic policies (and keep real exchange rate close to the equilibrium), and model the impact of lower than expected supply of crude oil from Russia in 2018 and slower growth in Russia in 2018 on the key macroeconomic indicators.
Belarus will return to growth under any scenario, mainly thanks to the recovery of exports and household consumption. Growth is especially sensitive to crude oil supply, while slower growth in Russia that undermines non-oil exports has smaller impact because of the fast adaptation of non-oil imports.
Recovery of non-oil exports volumes and prices together with surplus in ‘oil’ trade (if happens) lead to goods and services trade surplus of about 2% of GDP, helping to reduce current account deficit even further.