Two Against the Wind: The Economy of Deception

Despite the sanctions policy of “unfriendly” states against Belarus and Russia, the economies of the two countries are developing more dynamically than in the European Union, at least according to official statements from Moscow and Minsk. However, this development is not as dynamic as in other Eurasian Economic Union (EAEU) member countries, and independent economists are highlighting signs of slowing growth.

Sanctions have hit the “collective West” harder than the “union state”… This is the basic premise of officials’ speeches at the High-Level Group meeting of the Union State Council of Ministers (March 12), as well as the “Russia-Belarus: Features of Bilateral Trade” conference (March 14).

Russian Deputy Prime Minister Alexei Overchuk reminded that, according to preliminary data, the Russian economy grew by 3.6% in 2023. The Belarusian economy, in turn, grew by 3.9%, almost precisely (even better) matching the indicators outlined in Decree No. 441 “On the Main Parameters of the Forecast of Socio-Economic Development of the Republic of Belarus for 2023.”

First and foremost, officials link this success to the intensification of integration processes within the “union state,” reflected in the positive dynamics of mutual trade.

According to the Ambassador of Belarus to Russia, Dmitry Krutoy, the mutual trade volume between the two countries exceeded USD 54 billion in 2023. Meanwhile, Belarusian Prime Minister Roman Golovchenko cited a figure of USD 53 billion, and earlier, the head of the Russian Foreign Ministry published information on his website that the mutual trade turnover of the two countries for goods and services approached USD 50 billion in 2023. Russian Trade Representative Yuri Zolotarev clarified that although the data from the parties slightly differ, the discrepancy is not critical and is related to different calculation methodologies.

The economic growth, impressive in one coordinate system, does not look as beautiful and convincing in another. An analysis conducted by the “Pozirk” resource, using data from the Statistics Department of the Eurasian Economic Commission, shows that against the backdrop of sanctions, Belarus and Russia have become EAEU outsiders in GDP growth. In other words, the entire regional economy grew (by 3.8%), but the Russian and Belarusian economies developed slower than the rest. Armenia became the leader with 8.7%. They are followed by Kyrgyzstan with 6.2%, Kazakhstan with 5.1%, Belarus with 3.9%, and Russia with 3.6% (according to the IMF – 1.6% [forecast] and 3% respectively).

Independent economists believe that, with a high degree of probability, the “union” economy has entered a phase of growth slowdown – even considering “uplifting” forecasts. Specifically, the International Monetary Fund has raised its growth forecast for the Russian economy in 2024 from 1.1% to 2.6%.

The IMF predicts Belarus’s GDP growth at 1.3%, while the country’s leadership forecasts it at 3.8%. According to economist Dmitry Kruk, the Belarusian authorities resemble a person trying to walk against the wind. He states that starting from the 4th quarter of 2023, the economy is slowing down, disparities are growing, and the number of tools for stimulating growth (which would not lead to negative consequences) is decreasing, but the authorities fundamentally do not want to agree with this.