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Belarus Country Risk Report Q4 2019

Belarus Country Risk Report Q4 2019

Belarus's economy is set for a slowdown over the next few years.

The economy is facing growing headwinds from lower global oil prices, the sharply deteriorating global macroeconomic outlook and Russia's recent oil-tax changes.

Against this backdrop, we at Fitch Solutions have revised-down our real GDP growth forecasts to just 2.1% in 2019 and 1.9% the following year, from previous forecasts of 2.9% and 2.4% respectively.

The August 6 agreement between Russia and Belarus to raise the oil transit tariff through the Druzhba pipeline will only temporarily thaw relations between the two countries.

With Belarus running out of options other than to accept Russia's attempts at a much closer vision of integration between the countries, the foreign policy backdrop facing the country will remain challenging in 2019 and 2020.

Key Risks

Belarus will make scant progress in reducing the size of the country's external debt pile in the years ahead. As a result, Belarus will need to secure external financ-ing to meet foreign currency debt obligations, which will expose the country to significant financing risks.

Failure to secure external financing could trigger a vicious cycle of increased default risk and slowing growth.

Belarus will remain dependent on continued good relations with Russia and high yield eurobond issuance, the latter being sensitive to global demand conditions.

Russia's oil tax 'manoeuvre' represents a persistent risk to investment.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth Set To Slow Further In Belarus
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP FIVE IMPORTS IN 2018
TABLE: TOP FIVE EXPORTS IN 2018
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
10-Year Forecast
The Belarusian Economy To 2028
Long-Term Growth Prospects Remain Subdued
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Belarus Country Risk Q4 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsPolitical Outlook
Domestic Politics
Belarus-Russian Tensions Unlikely To Abate After Tariff Agreement
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Operational Risk
TABLE: OPERATIONAL RISK
Labour Costs
TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
Legal Environment
TABLE: BUREAUCRATIC PROCEDURES
TABLE: BUREAUCRATIC BARRIERS
Global Macro Outlook
Potential Policy Missteps Pose The Largest Risk To Global Growth
TABLE: GLOBAL MACROECONOMIC FORECASTS (2019-2024)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: BELARUS – MACROECONOMIC DATA AND FORECASTS

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