Belarus: Widespread protests spur uncertainty, weakening ruble
Mass demonstrations have rocked Belarus since the 9 August election, raising uncertainty against an already fragile economic backdrop. Protests erupted after the vote gave an overwhelming victory to President Alexander Lukashenko and was deemed fraudulent by the opposition and observers abroad. Lukashenko has ruled Belarus for over 25 years. Elevated political uncertainty will likely harm domestic activity, which is already weak from fallout from the pandemic, and has taken its toll on the ruble. Since 20 August, the ruble has depreciated 6.5%, which will likely put upward pressure on inflation ahead.
Going forward, the economic backdrop is challenging. The country already faces a struggle to keep its economy afloat and the possibility of a lingering or escalating political crisis risks denting sentiment further and weighing on the ruble. Commenting on the situation, Piotr Soroczynski, chief economist at the Polish Chamber of Commerce, notes: “To date, the economic impact of the unrest has been moderate. It would be very dangerous to escalate the conflict (by the administration and the president).” On the most likely outcome of the event, Soroczynski adds: ”Withdrawal from the current president […] may take several quarters. If the violence does not build up during this time, the economy will only experience a slight decline.” However, he warns: “An unfavorable variant is also possible. The president will long try to stay in power using increasingly brutal methods. Riots will negatively affect the condition of the economy.”