Belarus is the laggard of the Commonwealth of Independent States (CIS). Its economy has begun to recover, but it is following behind all the others and growth is weak. The GDP of Belarus increased by 1% year-on-year in the first half of the year following 0.9% y/y growth in January-May, according to official data.

Industrial production is picking up steam. In January-June 2017 Belarus' industrial output in current prices totaled BYR43.3bn up 6.1% in comparable prices against the same period of last year, according to the National Statistics Committee of Belarus.

In June, the annual growth rate of consumer prices went down to 6.5% from 10.6% in December 2016. In June 2017, core inflation was 5.3% in annual terms. A decline in actual inflation coupled with the confidence in the stability of this process made it possible for the National Bank to reduce the refinancing rate in H1 2017 that led to a decrease in the interest rates in the credit and deposit market as well.

The banking sector is stable but plagued by high NLPs and heavy dollarization. State-owned enterprises (SOE) still account for 60% of the loan books and banks remain partly a vehicle for directing state credits to large enterprises.

It is also struggling to fund its debt. Minsk was in talks with the International Monetary Fund (IMF) on a possible $3bn standby program but it remains allergic to the conditions that come with and talks failed in the summer. That left the country in the awkward position of being unable to pay its debts. However, a twin tranche Eurobond in July of $1.4bn, plus a loan from Russia of $700bn means the debt will be covered through to the start of 2018 now.

The government continues to grapple with half-hearted reforms and has made some progress but progress is slow.