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

  • Belarus will benefit from the recent improvement in market perceptions of its sovereign credentials, which will help its leadership embark on an expansionary fiscal trajectory in 2016, cushioning to a degree the negative impact of oil price declines on domestic demand.

  • Lower oil prices and the weak macro outlook for major trading partner Russia will have a significantly negative impact on the Belarusian economy, mainly by suppressing public sector revenues. This will have a knock-on effect on domestic demand, given the large footprint of the state in the economy, underpinning our bearish outlook in the coming years.

  • Inflation in Belarus will moderate slightly to 15% in 2016, from 16% in 2015, driven down by subdued demand-side pressures and credit growth, alongside slower pace of BYR depreciation.

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Belarus Operational Risk Coverage (8)

Belarus Operational Risk

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BMI View: Access to education and the quality of education on offer has increased substantially in recent years and Belarus now boasts high enrolment rates across all levels of education. This suggests businesses will have access to a labour pool with a high basic skill level - though we do note that the increase in university graduates is leading to a high level of emigration as the more qualified candidates pursue opportunities overseas. The labour force in Belarus is also restricted due to the ageing demographic and accompanying health problems, which reduce labour productivity. Labour and social taxes in the country are also high, though businesses do stand to benefit from the low national minimum wage. Overall, therefore, Belarus has a score of 58.1 out of 100 on the BMI Labour Market Risk Index which places the country a competitive seven...

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: Government initiatives to boost the nascent domestic pharmaceutical industry and reduce the reliance on imports will limit the attractiveness of Belarus to multinational drugmakers. Government interference, in the form of domestic bias in the medicine tendering process and pricing controls, will further reduce revenue earning opportunities. Additional risks include a continued poor economic forecast and rising regional geopolitical tensions.

Headline Expenditure Projections

Pharmaceuticals: BYR12,247bn in 2015 (USD801mn) to BYR14,219bn (USD783mn) in 2016; +16.1% in local currency terms and -2.1% in US dollar terms.

Healthcare: BYR60,885bn (USD3.98bn) in 2015 to BYR71,906bn (USD3.96bn) in 2016; +18.1% in local currency terms and -0.4% in US...

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

  • We have revised down our CME milk price forecast for 2016 and now see price...

  • We believe that there is currently disconnect between oil prices and fundam...

  • Price-elastic consumption growth and more limited growth in supply will mai...

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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