The scale of overheating in the Belarusian economy has decreased. In the first quarter, GDP will remain close to last year’s level. This is stated in an express analysis of the performance of the Belarusian economy based on December results, prepared by the Monitoring of the Belarusian Economy project.
As previously reported by Belstat, Belarus’ GDP grew by 1.3% in 2025. According to the publication, GDP growth in the fourth quarter amounted to 0.4% compared with the same period of 2024, following growth of 0.8% in the third quarter.
“Restraining effects on output in the fourth quarter of 2025 were caused by a contraction in industry amid slowing demand in Russia and internal resource constraints. The volume of construction work also declined in the fourth quarter of 2025 against the backdrop of some ‘cooling’ of investment demand. Growth in agricultural output and high consumer activity kept GDP from falling at the end of last year. The increase in consumer demand was reflected in a positive contribution of the services sector to GDP growth in the fourth quarter of 2025,” the publication says.
Economic overheating has declined and is now estimated at around 1–1.5%.
“In the first quarter of 2026, GDP volume will be close to the level of a year earlier due to restrained demand on the Russian market. Inflation is expected to be around 6.5–7% year on year in January–March. Since the National Bank is focused on stimulating economic activity rather than curbing inflation, there is a high probability of a slight easing of monetary conditions during the first quarter of the current year,” the authors of the analysis believe.
They expect that reduced investment demand in Russia, exhaustion of the potential to bring idle labour and capital into production, as well as a record level of inventories, will restrain the dynamics of Belarusian industry in 2026. According to the authors’ estimates, industrial output will decline by 3–5% in the first quarter. Production will begin to recover by mid-year, provided that activity in Russia increases.
“The growth of domestic investment accumulated in recent years should contribute to an expansion of production potential, but at restrained rates of around 1–2% per year due to declining efficiency of capital investment. Monetary policy will provide some support to industrial output by ensuring low interest rates on investment loans,” the document says.
The transport sector continues to show weak dynamics. The IT sector is also recovering slowly. An increase in consumer demand was noted in December, which may be linked to a temporary rise in demand for cars ahead of higher tax and customs duties on hybrids. Overall, last year consumer demand growth halved, from 12.4% in 2024 to 6% in 2025.
Inflation last year amounted to 6.8%. It is expected to remain at 6.5–7% in the first quarter.
“At the beginning of the current year, some pro-inflationary effects can be expected from higher tax and customs duties on hybrid cars, as well as a temporary acceleration of inflation in Russia due to an increase in the VAT rate.
However, later on, a reduction in excess demand in the Belarusian economy, slower wage growth and inflation in Russia will limit price growth. Even taking into account the accumulated price overhang, the probability of inflation rising significantly above 7% year on year under such conditions is assessed as low,” the publication says.
