Belarus’s economy slowed in August 2026
Over eight months, GDP increased by 1.9% YoY. Annual economic growth in August alone is estimated at around 0.7% YoY after approximately 5.4% YoY the month before. The weakening of output dynamics was to a significant degree the result of agricultural output volatility due to the uneven pace of the harvest campaign: the sector’s contribution to annual GDP growth was +2.3 p.p. in July and -0.6 p.p. in August.
Output dynamics slowed even excluding the direct contribution of agriculture: annual growth of non-agricultural GDP declined from ≈3.1% YoY in July to ≈1.3% YoY in August. The slowdown in growth was predominantly a consequence of a deceleration in manufacturing and construction. While volatility in construction activity is typical for Belarus, the slowdown in industry signals the limiting influence of investment demand in Russia and domestic resource constraints. Domestic demand, meanwhile, remained high, spurred by significant budget and quasi-budget injections and declining interest rates.
In the remaining part of the year, significant stimuli for domestic demand from economic policy can be expected to persist. The forgiveness of approximately $1.86 bn of public debt in Q2-2026 will allow the authorities to more actively channel budget resources into the economy, while the decline in interest rates on loans and deposits will support consumer activity. The stimulation of domestic demand in the absence of strong external shocks will allow Belarus’s GDP to grow by 2–2.5% in 2026, but will be accompanied by an increase in the money overhang – broad money supply has a high probability of gaining more than 20% for the year as a whole. This will impede a sustained slowdown in inflation, which is expected in the range of 5–6% YoY in 2026 and 6–7% YoY in 2027.