Publication: Belarus Country Economic Memorandum : Eeconomic Transformation for Growth
Date
2012-04-05
ISSN
Published
2012-04-05
Author(s)
World Bank
Abstract
The last decade in Belarus was marked by
an average economic growth rate of close to 8 percent
annually and an impressive eight-fold reduction in poverty.
Economic growth was initially driven by external factors,
but after 2005 expansionary domestic demand became the
prevalent contributor to growth. Growth was backed by large
state support to the economy, sizeable public investments,
and huge expansion of credit, particularly under government
directed lending programs. Simultaneously, the external
balance shifted from a surplus of 1.4 percent of growth
development product (GDP) in 2005 to a deficit of 15.0
percent of GDP in 2010. Throughout the period 2001-10, the
economic model relied on underpriced energy resources from
Russia, with an annual average size of the imputed subsidy
of over 13 percent of GDP. However, the existing growth
model has reached its limits and cannot ensure growth
sustainability without structural reforms. Going forward,
the growth model will have to rely on significant
productivity gains driven by structural reforms in an
environment of macroeconomic stability. Macroeconomic
adjustment which effectively combats the sources of external
imbalances in Belarus is a critical and necessary, but
insufficient condition for achieving sustainable economic
growth in the medium term. The Belarusian economy is facing
formidable challenges beyond the macroeconomic issue of
adequately financing its external imbalances: (1) how to
reallocate labor and capital to high productivity segments
of the economy; (2) how to restructure the state-owned
enterprise sector; and (3) how to support the underdeveloped
private sector and the services sector. By successfully
overcoming these challenges, Belarus will revive its
competitive segments of the economy and discover untapped
opportunities for growth. It will also diminish its economic
dependence on underpriced energy from Russia and move up the
value chain in global integration. With valuable
geographical location and an educated and disciplined labor
force, Belarus can restructure its economy, diversify its
exports, and increase the prosperity of its people.
Link to Data Set
Citation
“World Bank. 2012. Belarus Country Economic Memorandum : Eeconomic Transformation for Growth. © Washington, DC. http://hdl.handle.net/10986/12663 License: CC BY 3.0 IGO.”