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8 Apr 2019

EDB expects inflation in Belarus in 2020-2021 close to domestic projections

EDB expects inflation in Belarus in 2020-2021 close to domestic projections

MINSK, 8 April (BelTA) – The Eurasian Development Bank expects inflation in Belarus in 2020-2021 to be close to the targets set by the country’s central bank, BelTA learned from a regular macroeconomic review released by the Eurasian Development Bank (EDB).

According to EDB analysts, inflation is expected to temporarily pick up the pace in 2019 and may exceed the 5% target at the end of the year. The phenomenon is supposed to be temporary. Inflation is expected to get close to the targets set by Belarus’ central bank in 2020-2021. Belarus’ central bank expects inflation to reach at most 5% in late 2020. After that the bank expects inflation to go down to 4%.

Inflation was within the range targeted by the National Bank of the Republic of Belarus (NBRB) in 2018. A balanced monetary policy helped reach the goal. At the same time after a historic low was achieved in June-July 2018, inflation processes started to go faster in H2 2018 due to growing prices for food and fuel, faster inflation in Russia, and the remaining high consumer demand. The cycle of refinancing rate reductions was suspended in H2 2018 in view of the facts.

The Eurasian Development Bank expects Belarus’ GDP to gain 1.5-2% every year in the medium term in the absence of additional stimuli. The bank’s analysts believe that geopolitical tensions in the region remain the key risk for the Belarusian economy in 2019. Due to tight trade and economic ties between the Belarusian economy and the Russian one a potential escalation of sanctions against Russia may have a negative effect on economic activity in Belarus, too.

The Eurasian Development Bank believes it is possible to accelerate Belarusian economy growth as government initiatives to liberalize the business environment and enhance the country’s investment appeal are implemented. The adoption of the small and medium entrepreneurship development strategy in October 2018 in order to improve business operation terms and bolster the competitive ability of the Belarusian economy as a result represents a positive step in this direction, Eurasian Development Bank analysts believe.

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