Belarus

In-depth country-focused analysis on Belarus's economic, political and operational risk environment, complemented by detailed sector insight

Belarus

Our comprehensive assessment of Belarus's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Belarus, as well as the latest industry developments that could impact Belarus's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Belarus before your competitors.

Country Risk

Belarus Country Risk

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Core Views

  • The removal of EU sanctions on Belarus in February 2016 points to a shift in Brussels' stance towards Minsk from isolationist to integrating it with the West. Nevertheless, there are many impediments to a potential Belarusian pivot to the West, not least high economic dependence on Russia, meaning Belarus will remain firmly entrenched in Russia's orbit for the foreseeable future.

  • Belarus will continue to register modest fiscal surpluses in the coming years due to the prudent fiscal policy course outlined by its IMF loan arrangement. However, budget surpluses mask the precarious condition of public finances, with rising contingent liabilities stemming from overleveraged and unprofitable state-owned enterprises posing a significant risk to the sovereign balance sheet.

  • Consumer price growth in Belarus will slow in...

Belarus Operational Risk Coverage (8)

Belarus Operational Risk

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BMI View: There are considerable risks to investors due to crime in Belarus. Although foreigners are rarely the specific targets of violent crime, petty theft is common and the police force is considered highly corrupt, which exacerbates concerns. There is also a growing risk from cyber crime as well as financial crime that the Belarusian police force lacks the capacity to tackle. We do note, however, that there is very little risk of a terrorist attack in Belarus and interstate conflict risks are also low. This helps to improve the country's performance on the BMI Crime and Security Risk Index and Belarus is therefore ranked 16th out of 31 Emerging Europe states with a score of 56.7 out...

Belarus Operational Risk

Belarus Labour Market

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Belarus' very large and highly skilled urban labour force is a significant incentive for investors from a range of sectors. The country's high educational standards and enrolment rates from primary through to tertiary level mean investors can expect a high level of literacy and numeracy across the country. That said, health risks are high, raising the possibility of lengthy absenteeism. For these reasons, Belarus scores 59.1 out of 100 for Labour Market risks, tying for tenth position with Latvia in our regional Labour Market Risk index.

With its large labour force, urbanised population and good primary education system, there is a very high availability of labour with a consistent level of basic skills. The availability of labour is somewhat diminished by major health problems resulting from the Chernobyl nuclear catastrophe in 1986, the victims of which are still being accounted for. In particular, thyroid cancer has been one of the major...

Belarus Logistics

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Belarus' supply chain needs are currently being met, with the country's trade demands little changed from when it was a member of the Soviet Union. Neighbouring Russia plays a dominant role in both imports and exports, with Belarus' logistics network focused on importing crude oil from Russia, which it then refines and exports back. The lack of demand for this supply chain to diversify, coupled with the massive challenges that would need to be overcome for such a change, makes Belarus an unattractive destination for investment, a view shown by the country's below-average global score of 43.1 out of 100 in our Logistics Risk index, in which Belarus is 22 nd out of 30 emerging European countries.

Belarus' dependence on Russia and its state-run economy limits growth prospects, and therefore the country's attractiveness to investment. The population is in decline, which will affect future consumer demand as well as public capital...

Belarus Trade & Investment

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The Belarusian economy follows the Soviet model. It is dominated by parastatal firms and is tightly regulated by government, which distorts market forces. International companies find it difficult to compete, especially given the high levels of corruption that pervade the economy and public administration. Business opportunities are thus limited, and the risk of doing business is high, and Belarus has very poor levels of economic openness and a high degree of legal risk. Government intervention presents the lowest degree of risk in the three pillars of our Trade And Investment Risk index. Belarus scores 48.0 out of 100 in the index, and ranks 24 th in the region.

The economy is dominated by government-owned enterprises which hold a monopoly on key sectors of the economy, while the government has the power to set prices and regulate the market. This limits the competitiveness of the private sector and deters foreign investment,...

Belarus Industry Coverage (5)

Defence & Security

Belarus Defence & Security

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BMI View: Throughout 2016, we expect Belarus to continue to align its security and economy with Russia, even though the former has begun deepening its diplomatic links with Western Europe. We expect defence spending to remain limited over the medium term due to low threats from domestic unrest, terrorism and interstate conflict as well as difficult economic conditions. New procurement will continue to focus on the aerospace segment, in line with the government's stated goal of building up the Belarusian air force. Due to the limited production capabilities of domestic manufacturers, contracts for aircraft and air defence systems will be awarded to foreign companies - predominantly from Russia.

In 2016 we expect the Belarusian...

Food & Drink

Belarus Food & Drink

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BMI View: The Belarusian food and drink industry will grow at constrained rates as economic conditions remain dire in the country. Household consumption will remain weak as consumer purchasing power is eroded by rising inflation, currency devaluations and the escalation of wage arrears.

Headline Industry Data

  • Food consumption value (local currency) growth year-on-year (y-o-y) in 2015: +16.6% (-14.2% in USD terms); compound annual growth rate (CAGR) 2014-2019: +19.1% (2.7% in USD terms).

  • Per capita food consumption value (local currency) growth (y-o-y) in 2015: +17.2% (-13.7% in USD terms); CAGR 2014-2019: +19.7% (+3.2% in USD terms).

  • Alcoholic drinks value (local currency) sales growth y-o-y in 2015: +29.1% (-5.0% in USD terms); CAGR 2014-2019: +21.8% (4.6% in USD terms...

Medical Devices

Belarus Medical Devices

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BMI Industry View: The Belarusian medical device market is under-developed and heavily reliant on imports. Per capita device expenditure is one of the lowest in Europe at USD43. The outlook for the Belarusian medical device market is mixed, with robust growth projected in local currency terms, but due to the depreciation of the Belarusian ruble, the market is forecast to grow at a slow pace in US dollar terms over the 2014-2019 period.

Headline Industry Forecasts

  • We anticipate medical device market growth at a CAGR of 2.5% in US dollar terms over the 2014-2019 period,...

Pharmaceuticals & Healthcare

Belarus Pharmaceuticals & Healthcare

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BMI View: Despite high forecasted growth in pharmaceutical sales and healthcare expenditure, Belarus will fail to attract investment from foreign pharmaceutical firms. Government policy to promote the use of domestically-produced medicines will cause a slowdown in pharmaceutical imports and the country's investment appeal will be further dampened by an unstable currency and rising regional political tensions.

Headline Expenditure Projections

Pharmaceuticals: BYR10,405bn in 2014 (USD1.02bn) to BYR12,247bn (USD801mn) in 2015; +17.7% in local currency terms and -21.2% in US dollar terms.

Healthcare: BYR48,816bn (USD4.76bn) in 2014 to BYR60,395bn (USD3.95bn) in 2015; +23.7% in local currency terms and -17.1% in US dollar terms.

Risk...

Telecommunications

Belarus Telecommunications

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BMI View: Hyperinflation has plagued Belarus in recent years and the recent devaluation to the rouble has made it difficult for operators to affordably source new SIM cards and handsets. International call termination rates have also spiked upwards quite sharply, putting operators under considerable financial pressure. The launch of beCloud's 4G network in late 2015 will allow low-cost advanced services to be deployed, but its wholesale services model could prove unsustainable if third parties cannot afford to interconnect with it.

Strong 3G Uptake Linked To Low Prices
Belarus Mobile Market Forecasts
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Latest Belarus Articles

  • With global growth continuing to stutter amid unconvincing growth performan...

  • A few key themes stand out when comparing BMI's forecasts against Bloomberg...

  • We have upgraded our oil price forecast this month with markets having pric...

Latest Belarus Blogs

  • BMI Research regularly carries out scenario analysis of 'low probability-hi...

  • Business Monitor International (BMI) has just published a special report ‘F...

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