In January-July 2020 Belarus' GDP contacted by 1.6% year-on-year, according to the National Statistics Committee as cited by BelTA.

According to initial estimates, the GDP amounted to almost BYN80bn ($32.4bn)  in current prices, or 98.4% as against January-July 2020 in comparable prices.

In January-July 2020, the GDP deflator index equalled 111.3% year-on-year.

The central bank expects the annual inflation to stay at 5-5.3% till the end of the year, the Chairman of the Board of the National Bank of the Republic of Belarus (NBRB) Pavel Kallaur said after the board's meeting held on August 12 to discuss monetary policy, as cited by BelTA.

 “The annual inflation is expected to be at 5-5.3% till the end of the year. A combination of lengthy disinflation factors, which effect is already manifested, will help keep prices stable later on,” Pavel Kallaur said.

The National Bank of the Republic of Belarus will keep the refinancing rate and interest rates on liquidity operations at the current level of 7.75%, the NBRB said on August 12.

The refinancing rate was reduced from 8% to 7.75% in Belarus on 1 July. The overnight lending rate was cut from 9% to 8.75% per annum and the overnight deposit rate – from 7% to 6.75% per annum.

The factors holding down inflation include disinflationary external conditions. Economies all over the world are starting to recover after a deep recession in Q2 2020 as countries lift coronavirus-related restrictions. At the same time it is assumed that the recovery of economic activity will be lengthy due to the coronavirus infection situation. It will continue suppressing foreign inflation below projections till the end of 2021.

“On the whole, external conditions will have a restraining influence on prices for the goods Belarus imports,” Kallaur added.

As for the Belarusian economy, the NBRB head believes that slow recovery of the external demand will restrain the growth of business activity.

The official said: “Budget measures will continue providing support to the Belarusian economy. It will help enterprises and the population overcome consequences of the pandemic and will help gradually restore the aggregate demand. The stimulating effect of the budget policy measures is expected to manifest strongly in 2020.”

In his words, as economic growth resumes, the volume of state budget incentives will be gradually reduced. As a result, the deficit of the country's budget will gradually go down from this year's high level.

“As economic activity recovers, the balance of payments will be improved. We expect foreign currency sales on the home market to exceed foreign currency purchases, thus helping keep up the gold and foreign exchange reserves. The exchange rate of the national currency will stay close to the equilibrium,” Kallaur said.