Will the Consumer Boom Continue in 2025?

The Belarusian government has presented a report on key macroeconomic indicators, claiming the successful implementation of a “mobilization plan” aimed at ensuring growth. On the eve of the 2025 presidential elections, it is not surprising that the report takes on an optimistic tone. Economic regulators in Belarus assess the near-term outlook even more positively, projecting current trends into the future: the growth target for 2025 is set at 4.1%. International experts, however, predict a significant slowdown in growth.

According to preliminary data from Belstat, Belarus’s nominal GDP growth in 2024 amounted to 104%, exceeding the target of 103.8%, as reported by Prime Minister Raman Galouchanka. Real GDP, the figures for which are typically not disclosed in government reports, adjusted for a deflator of 109%, contracted to approximately 95%. Despite “external inflationary pressure” and rising household incomes, inflation reached 5.2%, staying within the 6% cap set by the Lukashenka regime. Nonetheless, this level of inflation remains relatively high in terms of supporting growth: as economists often say, “Give me inflation, and I’ll show you GDP growth.”

Another key indicator of economic growth, alongside GDP and inflation, is investment, which, according to official data, grew by 8%. This is one percentage point higher than the previous year. It was reported that the structure of investments has improved, with most of the funds directed toward equipment and technology, where investment growth exceeded 40%.

Finally, real disposable household incomes rose by 9.5%, and real wages increased by 12%. As of November 2024, the average wage exceeded BYN 2,200.

“These four indicators have been achieved and even exceeded,” Galouchanka concluded. However, he added, “One target will likely be missed — export growth.” Export statistics currently cover only the first 11 months of the year, during which growth was 3.8%. If December’s pace holds, the annual export volume is expected to reach USD 50 billion. Nonetheless, the prime minister expressed concern about the growing foreign trade deficit, which he attributed to faster increases in the prices of raw materials and resources compared to finished goods.

Experts agree that the reported results were primarily achieved due to the government’s soft economic policies (with the downside being an increase in the trade deficit) and growth in the Russian economy. According to the World Bank, Russia’s GDP grew by 3.4% last year, slowing from 3.6% in 2023. The World Bank projects further deceleration: Russian GDP is expected to grow by 1.6% in 2025 and 1.1% in 2026.

Another crucial driver of growth has been increased domestic demand and household consumption. Paradoxically, this was partially fueled by Belarusians emigrating abroad, which created a labor shortage. This shortage, in turn, drove real wage growth, which has risen by nearly 25% compared to the pre-war period. Finally, rising wages, combined with inflationary expectations, led not to increased savings but to a consumer boom, further supported by the National Bank’s soft monetary policy.

Economic regulators in Belarus remain optimistic about the near future, projecting current trends into 2025: the growth target is set at 4.1%. Many independent economists, however, foresee a slowdown in growth, which has already been evident since the second half of 2024. According to Dzmitry Kruk, the Belarusian economy has reached the peak of its recovery growth.

By the end of last year, restrictive factors and constraints had become more apparent. First, there is the gradual cooling of the Russian market, which will inevitably affect consumer demand in both Russia and Belarus. Second, the deterioration of the foreign trade balance is becoming a significant problem, as Belarus lacks sustainable sources to cover the deficit. Third, the policy of artificially curbing inflation may yield negative consequences in the long term, particularly given rising prices in Russia, Belarus’s key economic partner.

The World Bank forecasts that Belarus’s economy will slow to 1.2% growth in 2025 and 0.8% in 2026. Notably, these estimates are 0.5 and 0.3 percentage points higher than the autumn forecasts, taking into account the strong macroeconomic performance of the past year.