Belarus economy and business climate 2017: quick summary

Belarus economy and business climate 2017: quick summary

The Belarusian ruble exchange rate is stabilizing, and the level of inflation fell to record levels, but salaries are not growing enough.

Belarus becomes IT and crypto harbor

At the end of December, President Alexander Lukashenko signed a truly revolutionary decree "On Digital Economy" - it is also known as the "Decree on Hi-Tech Park 2.0".

The decree creates unprecedented conditions for conducting IT business in Belarus, attracting foreign specialists and capitals, and in theory developing all other branches of the national economy, from agriculture and industry.

In addition, Belarus officially legalized the technology of blockchain, smart contracts and crypto-currencies - in this Belarus has become one of the world leaders. 

MORE: Full analysis of Decree on Hi-Tech Park 2.0: How will investors benefit in Belarus?

More freedom for entrepreneurs

Perhaps, the main result of the outgoing year is the signing of Decree No. 7, according to which the conditions for conducting small and medium-sized businesses in Belarus have been much simplified. For example, in some cases now you can start your business without any red tape - you simply notify the local authorities and pay tax. Requirements for entrepreneurs have been significantly reduced and the possible number of their inspections should also decrease.

Since the decree was adopted by the president relatively recently, in 2017, it did not manage to give concrete results, but the first positive results could be seen already in the first half of 2018.

The success of the outgoing year is that the government has taken specific steps in their desire to increase the share of small and medium-sized businesses in the coming years.

MORE: Decree No.7 analysis

The desired $500 salary is still a dream?

The Belarus President demanded repeatedly to bring the level of the average salary in Belarus to $500 in equivalent. This demand has not been met in all industries.

The government now refuses to just "print" money in order not to increase inflation and connects the growth of salaries with the increase in labor productivity. However, officials decided to help some workers: at the end of the year salaries were raised for university teachers, employees of culture and social institutions, as well as for junior medical personnel. At the same time, officials acknowledged that the growth rates of the average salary are slightly behind the plans, and the goal will not be met everyone.

From the beginning of 2017 average salaries have been growing and have now achieved about $400 as of October 2017. 

Belarusian ruble has stabilized, loans are becoming more affordable

2017 was successful in terms of exchange rates: over the 12 months the value of the dollar has changed insignificantly - largely due to the special policy of the National Bank of Belarus.

Since the beginning of the year the dollar has risen slightly more than two kopecks - Belarusians hardly noticed such a change on their wallets.

The euro has been rising in value more quickly but these changes are also justified by global trends. Changes with the Russian ruble are also good.

In addition, since the beginning of 2017, the National Bank has lowered the refinancing rate several times, to 11%, which also positively affected the markets of loans and deposits. Already in 2018, the regulator promises to lower interest rates on loans, and in the future to finally dedollarize the national economy.

Inflation defeated?

2017 went down in history as a year with the lowest inflation in the history of sovereign Belarus: for the first time it fell to one-digit values as was promised. For example, in 2016, the consumer price index was 11.8%.

According to the latest (November) data, inflation in 2017 was less than 5% percent.

At the end of the year, the inflation rate is expected at 5.5-5.6%. In 2018 forecasts the inflation should again rise but moderately, to about 7%, although it might be lower.

GDP is growing, though slowly

In 2016, despite the government's forecasts for growth of 0.3%, the country's GDP fell by 2.6%. For this year, the GDP growth rate forecasts were modest - 1.7%, but at the beginning of the year many were not sure that it would be possible to reach the growth altogether. Some predicted decline.

However, in the second half of 2017, the economy of Belarus really recovered - in late autumn, the International Monetary Fund (IMF) estimated the growth rate at 1.7%, and according to some estimates, it could be as much as 2%. The exact figures for Belarus GDP 2017 will be known by the middle of January 2018, but the fact that it is growing is not disputed.

Belarus GDP forecast 2018 is a 3.4% growth. International structures emphasize: it is necessary to reform the state enterprises to achieve such indicators, otherwise growth should be expected at not more than 2%.