Belarus' GDP grew by 3% year-on-year in 2018, according to the national statistics agency Belstat.
The Belarusian economy has been recovering well on the back of the ongoing recovery in neighbouring Russia, the post-Soviet country's main trade partner. Belarus' GDP grew by 2.4% y/y in 2017 after two years of recession. It contracted 3.9% y/y in 2015 following 1.6% y/y growth in 2014.
In November, the International Monetary Fund (IMF) said that the lender forecasts a 3.5%-3.7% y/y growth in 2018. "Such an outlook is based on a number of factors: oil prices are higher than expected, prices for a number of export commodities are higher, external demand was pretty good, [the] average salary grew at a fast pace," head of the IMF mission to Belarus Jacques Miniane said.
Meanwhile, recently, the Belarusian government was forced to revise downward its forecast for the country’s GDP growth in 2019 (from 4.5% y/y to 2.1% y/y). According to Belarusian officials, the new forecast takes into account recent changes in the external economic environment, including changes in oil prices and the economic situations of the country's major trading partners, specifically Russia, and the values of their currencies.
The target scenario was initially based on an oil price assumption of $70 per barrel, but the assumption was eventually reduced to $65 per barrel.
Minsk's forecast also takes into account the negative consequences of Russia’s so-called tax manoeuvre for Belarus. The tax manoeuvre shifts the tax burden from export duty on oil and petroleum products to mineral extraction tax (MET) on oil production. It envisages a gradual reduction in the rate of export duty on oil and petroleum products from 30% to zero in the period from 2019 to 2024 and a proportionate increase in MET.
On January 17, the International Monetary Fund (IMF) said in a statement that the multinational lender's medium-term outlook for Belarus is "subdued absent vigorous structural reforms, weighed down by unfavourable demographics and weak productivity".
At this juncture, medium-term growth is projected at 2%, limiting convergence towards the income levels of richer neighbouring countries, according to the IMF.
However, this modest outlook is "conditional" on full compensation from Russia for losses triggered by the so-called tax maneuver. "Should compensation be significantly less than full - and this is the key risk hovering over the Belarusian economy at this stage - medium-term growth could be materially lower than 2%, and the budget and current account deficits higher than projected above," the statement reads.