MacroBy economists have presented an analysis of the Belarusian economy’s performance in the second quarter and updated their GDP forecast for 2026-27.
The forecast notes that Belarusian GDP grew 3% in the second quarter compared with the same period last year, while growth accelerated to 1.5% in the first half of the year and to 2.1% over the first seven months.
“GDP growth accelerated thanks to strengthening domestic demand under the influence of government stimulation and the action of idiosyncratic factors, primarily tolling oil processing and favorable price terms of trade. Domestic demand growth again significantly outpaced the potential for sustainable output expansion, leading to an increase in economic overheating to 2–2.5% in Q2-2026”, the authors of the forecast said.
High growth rates also continued in the second quarter, while investment increased substantially due to government stimulus.
“ An increase in receipts from the Russian budget through the damper mechanism will help ensure a balanced consolidated budget for Belarus in 2026. The additional revenues will allow for an increase in government expenditure volumes and a strengthening of the fiscal impulse in H2-2026. In 2027, the volume of budget expenditures will remain high, but the impulse will weaken amid the expected reduction in transfer receipts from Russia. Under this scenario, the consolidated budget deficit will not exceed 1% of GDP in 2027, and public debt will remain close to 25% of GD”, MacroBy said.
The government will pursue an expansionary policy to approach the target GDP growth rate of 2.8% this year. The forecast authors also expect the National Bank to reduce the refinancing rate by 0.25-0.5 percentage points by the end of the year.
“GDP growth will come in close to 2–2.5% in 2026, and its dollar volume will exceed $100 bn. Fiscal and monetary stimulus will support domestic demand. It will continue to grow faster than productive potential, which is limited by a labor shortage, business environment uncertainty, sanctions pressure, and institutional constraints. As a result, the external trade position is forecast in a deficit of around 1% of GDP. Such a deficit corresponds to a weakening of the national currency by 1–3% over 2026 and 2–4% over 2027 in basket-of-currencies terms. If tolling oil processing volumes decline as domestic fuel production in Russia recovers, and the fiscal stimulus weakens against this backdrop, GDP growth will slow toward the potential rate of around 1.5% in 2027”, the forecast says.
The foreign trade deficit will be around 1% of GDP this year and next year, which will not create significant pressure on the ruble exchange rate. The currency will move close to its equilibrium path, implying a weakening of the national currency by 1%-3% against the currency basket in 2026 and by 2%-4% in 2027.
Inflation will be around 5%-6% this year and will accelerate to 6%-7% next year.
“Risks of deviations from the baseline forecast remain high and two-sided. Uncertainty surrounding the estimate of the inflationary overhang and its pass-through into prices following the easing of controls is significant. A greater stimulus for domestic demand from the authorities’ economic policy also cannot be ruled out, which would temporarily raise GDP growth but at the cost of greater volatility in the future. The action of the idiosyncratic factors that drove the upward revision of the 2026 economic growth forecast is difficult to predict. The continuation of high tolling oil processing volumes in 2027 would lead to somewhat higher GDP growth and a stronger ruble compared to the baseline forecast. The probability of a recession in Russia in the event of prolonged and substantial impact of destructive non-economic factors on the economy represents the key downside risk for the Belarusian economy”, the forecast authors concluded.
