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Despite international sanctions and geopolitical isolation, Belarus’s economy has shown surprising resilience. Following a steep contraction of 4.7% in 2022, the economy rebounded with a 3.9% GDP growth in 2023. This rebound, which surpassed official expectations, was largely driven by increased demand from Russia and government efforts to stimulate domestic economic activity. The government’s measures have included direct fiscal stimulus and a monetary policy that fosters lending to strategic sectors. Additionally, Belarus has worked to offset the impact of Western sanctions by seeking alternative markets and suppliers, with a particular focus on deepening ties with Russia. Nevertheless, questions about the durability of this recovery linger, as the projections for 2024 and 2025 indicate a likely slowdown in economic expansion. Analysts forecast that Belarus’s GDP growth will decelerate to between 2.1% and 3.6% in 2024, followed by an even narrower growth range of 1.8% to 4.1% in 2025. This broad spectrum of forecasts reflects deep uncertainties regarding the economic trajectory of Belarus.

One of the primary sources of this uncertainty is Belarus’s significant dependency on the Russian market. Economic recovery has been largely reliant on Russian demand, which has provided an outlet for Belarusian goods and a buffer against the isolation imposed by Western sanctions. While this partnership has offered short-term relief, it also exposes Belarus to risks related to the stability of Russia’s own economy. Any fluctuations in the Russian market or shifts in Russian political priorities could have direct repercussions for Belarus. Moreover, the ongoing sanctions have created a layer of unpredictability, restricting Belarus’s access to global markets, technology, and capital. The cumulative impact of sanctions has led to what Belarusian authorities describe as “economic quarantine,” with nearly half of the economy directly or indirectly affected by these restrictions.

Structural economic challenges pose additional hurdles. Belarus’s economy is characterized by a high degree of state control, with inefficient state-owned enterprises (SOEs) dominating key sectors. These enterprises are often shielded from competition and sustained by government support, which inhibits innovation and efficiency. Without substantial reforms, the dominance of SOEs remains a barrier to economic modernization and growth. Additionally, Belarus faces disruptions in its financial sector. As of late 2023, major Belarusian banks, including Belagroprombank, Dabrabyt Bank, the Development Bank of Belarus, and Belinvestbank, have been disconnected from the SWIFT international payment system. This disconnection complicates international financial transactions, limiting Belarus’s ability to engage in global trade and attract foreign investment. Moreover, the political crisis following the 2020 elections has triggered a significant wave of migration, especially among skilled professionals. The IT sector, once a bright spot in Belarus’s economy, has been hit particularly hard by this brain drain, which could have lasting effects on the country’s economic prospects.

As the 2025 election approaches, several key economic indicators will be closely monitored. GDP is projected to reach $77.57 billion by 2025, an increase from $71.86 billion in 2023. The government has set an inflation target of 5% by 2025, reflecting an effort to maintain price stability amid inflationary pressures. Exports are expected to grow by 5.4%, while investment is forecasted to increase by 7.8%. Real disposable income is projected to rise by 4%, offering a potential boost to consumer confidence and domestic demand. Meanwhile, international reserves are targeted to reach at least $7.1 billion, which would provide a buffer against external shocks and help stabilize the economy.

In the lead-up to the 2025 election, President Lukashenko’s economic strategy is expected to focus on bolstering short-term growth through several key areas. First, the government is likely to maintain an expansionary fiscal policy, using public spending to stimulate economic activity and support real wage increases. This approach is intended to cushion the impact of sanctions and provide tangible benefits to the population, reinforcing Lukashenko’s political base. Second, the National Bank of Belarus is expected to pursue an accommodative monetary policy, promoting lending to key sectors in an effort to boost economic activity. Third, import substitution policies will likely intensify, with the government aiming to reduce dependency on Western imports by fostering domestic production and establishing alternative supply chains, particularly with Russian suppliers. Fourth, Belarus is anticipated to deepen its economic integration with Russia, as Western sanctions have closed other avenues for trade and cooperation. Finally, the government may expand state-sponsored programs, such as preferential lending and tax incentives, to support specific industries and stimulate targeted economic growth.

The 2025 election will serve as a referendum not only on Lukashenko’s political leadership but also on his economic stewardship. The government’s capacity to deliver meaningful economic gains amid significant external and internal pressures will be crucial in determining Belarus’s future direction. Both domestic and international observers will closely watch economic indicators and policy decisions for signs of Belarus’s trajectory, as the outcome of this election could have far-reaching implications for the country’s political and economic future.

Written by: Nenad Stekić