Belarus’s economy continues to make good progress on the back of Russia’s revival.

GDP growth in Belarus in 2018 may exceed 3.5% this year. Belarus needs to make the maximum use of the current positive trends on foreign markets, including the prices for oil and potash fertilizers and is using the benign conditions to reduce its debt load as well as reform the capital markets by hooking up to the international settlement system to improve its borrowing capacity in the future.

GDP peaked at about $80bn in 2014 and this year the government expect it to reach $60bn.The government plan is to then increase the size of the economy to $100bn by the end of 2025. In early May the EBRD reviewed its Belarusian economy growth forecast upwards.

Belarus' industrial output was up a healthy 8.8% in January-April 2018 the national statistics committee reported on May 16.

Inflation in Belarus is also modest and stood at 0.3% month-on-month in April (vs 0.8% m/m in March), and 2.8% year-on-year (vs 4.5% y/y in March), according to the national statistics agency Belstat.

The central bank also predicts the key refinance rate will be cut to 10% in 2018. In March, the NBB left unchanged its key refinancing rate at 10.5% following a cut of the rate by 0.5 percentage points (pp) in February.

GDP growth this year will be underpinned by export and by the growing domestic demand. All Belarus’ traditional products are rising including vehicles, equipment, and machine tools.

Potential shocks are mostly external with a downturn in the Russian economy being the greatest.