Belarus: Recovery continues to gain steam in Q3
December 29, 2017
Belarus’s economic recovery from a two-year long recession continued to pick up pace in the third quarter of 2017. Official data released on 29 December by the National Statistical Committee (Belstat) showed that the economy expanded 2.9% compared to the same period last year, considerably exceeding Q2’s 1.7% annual growth. The print marks the highest result since Q1 2012.
The jump in growth was powered by a surge in domestic demand, which rose 4.3% year-on-year in Q3, up from 1.9% in Q2. Notably, fixed investment soared in the quarter, growing a stellar 8.0% in annual terms after contracting 0.3% in the second quarter. Fixed investment expanded for the first time since Q4 2014 in Q3 and marked the best reading since Q2 2011. Furthermore, private consumption grew at more than double the rate in the second quarter (Q3: +5.9% year-on-year; Q2: +2.7% yoy), aided by slowing inflation and a healthy influx of remittances amid a broader regional recovery. Government consumption, on the other hand, contracted more sharply (Q3: -1.2% yoy; Q2: -0.7% yoy).
The external sector continued to drag on growth, however. Although growth in exports gained steam, growing 8.1% annually in Q3, compared to 5.9% in Q2, imports rose at a faster rate once again (Q3: +15.9% yoy; Q2: +8.5% yoy), translating into a deterioration in the trade deficit.
Setting a growth target of 3.5% for 2018, the government aims to boost competitiveness and buoy export growth in a bid to overturn the negative trade balance and alleviate the external debt burden, while maintaining price stability to ensure that prices do not increase by more than 6.0%.
Belarus GDP Forecast
FocusEconomics Consensus Forecast panelists expect the economy to grow 1.7% in 2018, which is up 0.1 percentage points from last month’s projection. For 2018, the panel sees GDP growth accelerating to 1.9%, which is up 0.1 percentage points from last month’s forecast.
Author: Nihad Ahmed, Economist