The economy of Belarus is still deep in recession but the situation is
stabilizing and the IMF expects a mild 0.6% growth to resume in 2017.
Industrial production growth remains in the red and unemployment is
creeping up, albeit from a low base . Consumption is expected to decline as
although nominal wages have risen in the last years, the government has
ignored the inflationary impact of hiking wages and almost all the gains have
been inflated away.
At the same time investment in the dumps but since the boom years the
government has been investing heavily . In recent years this investment has
been financed by foreign borrowing rather than funds drawn from the economic
rents drawn from subsidised cheap Russian energy imports.
Many of Belarus problem derive from the problems in Russia which has
been implicitly supporting the Belarusian economy for two decades to keep it on
board as a political ally. But Russia can no longer afford this largess and has
been reducing its support.
This has two impacts on Belarus: to make it look for a diversified partner
base and cast its net increasingly further afield - specifically it has been
courting China. Secondly, the growing economic pain has spurred the
government into attempting some real reforms, albethem limited to improving the
efficiency of the state spending programme rather than go for true liberal
economic reform, which nevertheless may result in some significant gains.