Belarus: A Rich Country Or Not?

Belarus, formerly known as Belorussia or White Russia, is a landlocked country in Eastern Europe. It was the smallest of the three Slavic Soviet republics, alongside Russia and Ukraine, before it claimed its independence in 1991. Belarus has close political and economic ties with Russia, with the two countries agreeing to create a two-state union in 1999. Belarus has an upper-middle-income mixed economy, with the state retaining control of key industries. It is the 74th-largest economy by GDP and ranked 53rd out of 189 countries on the United Nations Human Development Index in 2018.

Belarus has an upper-middle-income mixed economy

As of 2018, Belarus ranked 53rd out of 189 countries on the United Nations Human Development Index, appearing in the group of states with "very high development". The country has an efficient health system, with a very low infant mortality rate of 2.9, compared to 6.6 in Russia or 3.7 in the United Kingdom. The rate of doctors per capita is 40.7 per 10,000 inhabitants, and the literacy rate is estimated at 99%. According to the United Nations Development Program, the Gini coefficient (inequality indicator) is one of the lowest in Europe.

Before the October Revolution, Belarus was a relatively underdeveloped country, heavily reliant on agriculture. However, after the construction of railways in the late 19th century, the country experienced rapid economic and industrial growth, with cities like Minsk, Vitsebsk, Hrodna, Pinsk and Homel becoming significant industrial centres. During the post-war years, Belarus rapidly industrialised and became an important trade hub between the Soviet Union and Europe, with manufacturing becoming a pillar of its economy. Belarus was known as "the Soviet assembly shop" due to its role as a producer of goods made from raw materials imported from the Soviet Union.

Since the disintegration of the Soviet Union, Belarus has maintained government control over key industries and has avoided the large-scale privatisations seen in other former Soviet republics. The country's economy has faced challenges, including financial distress, currency devaluation, and trade deficits. However, between 2001 and 2005, Belarus's economy demonstrated steady and dynamic growth, with GDP growing at an average rate of 7.4 percent.

Belarus has a well-developed industrial sector, producing tractors, trucks, earth movers, metal-cutting machine tools, agricultural equipment, motorcycles, chemicals, fertilisers, textiles, and consumer goods. The country has a strong agricultural sector, with chief products including potatoes, flax, hemp, sugar beets, rye, oats, wheat, dairy, and beef cattle. However, Belarus has only small reserves of petroleum and natural gas and relies heavily on imports from Russia.

The country's economy is closely tied to Russia, with Russia being a major export market and source of imported energy. Belarus has also established trade agreements with other countries, such as the Eurasian Economic Union, which allows for the free movement of goods and services between Belarus, Russia, and Kazakhstan.

Belarus is heavily reliant on subsidised Russian energy

Russia has traditionally provided Belarus with subsidised oil and gas. This played a significant role in Belarus's economic growth in the early 21st century, allowing the country to save about $5 billion per year, or 15% of its GDP, on energy imports on average between 2000 and 2008. Russian energy subsidies have declined since 2007, which has directly affected Belarus's economy. In 2020, the country was paying more for gas than the average European buyer, although oil remained 15% below market value.

Belarus's energy sector is dominated by state-owned companies operating under the supervision of the Ministry of Energy. The country's electricity sector is operated by a single vertically integrated national energy company, BelEnergo, while gas distribution is handled by BelTopGaz. The Belarusian government believes that maintaining control over the energy sector will guarantee a secure and stable energy supply.

In addition to its reliance on crude oil imports, Belarus also imports almost all of its natural gas from Russia, which it uses for heating, the production of petrochemical products and nitrogen fertilisers, and as fuel for its thermal power plants. The country's industrial sector is the largest final energy consumer, followed by the residential sector. Oil products represent 30% of final energy consumption, while heat, natural gas, and electricity collectively contribute to over 64%. Fossil fuels remain crucial for the country's economy and essential services.

The launch of the Astravets nuclear power plant in 2020 was expected to reduce Belarus's dependence on energy imports from Russia. However, it has instead created new challenges, as the country now also relies on nuclear fuel imports from Russia. Belarus's energy sector continues to face pressures due to its persistent dependence on fossil energy imports from Russia and the strong influence of Russia's Gazprom in the organisational structure of the energy sector.

Belarus has a post-Soviet transition economy

Belarus has an upper-middle-income, post-Soviet transition economy. As such, it has rejected most privatisation efforts in favour of retaining centralised political and economic controls by the state. This highly centralised economy emphasises full employment and a dominant public sector. Belarus has been described as a welfare state or market socialist.

As a former Soviet republic, Belarus had a relatively well-developed industrial base, but it is now outdated, inefficient, and dependent on subsidised Russian energy and preferential access to Russian markets. Belarus's agricultural base is largely dependent on government subsidies.

Following the collapse of the Soviet Union, Belarus underwent a brief burst of economic reforms, including the privatisation of state enterprises, the creation of private property rights, and the acceptance of private entrepreneurship. However, by 1994, the reform effort had dissipated. Since then, Belarus has maintained government control over key industries and avoided the large-scale privatisations seen in other former Soviet republics. About 80% of industry remains in state hands, and foreign investment has virtually disappeared. Several businesses have been renationalised. State-owned entities account for 70-75% of GDP, and state banks make up 75% of the banking sector.

The period between 1996 and 2000 was characterised by significant financial distress, particularly in 1998 and 1999, due to the financial and economic crisis in Russia. This resulted in a sharp increase in prices, the devaluation of the national currency, a decline in trade with Russia and other CIS countries, and an overall deterioration of the country's balance of payments.

Between 2001 and 2005, the Belarusian economy demonstrated steady and dynamic growth, with GDP growing at an average rate of 7.4%. This growth was mainly due to the performance of the industrial sector, which grew at an average of more than 8.7% per year.

In 2011, Belarus experienced a financial crisis that led to a nearly threefold devaluation of the Belarusian ruble. The Belarusian economy has continued to struggle under the weight of high external debt servicing payments and a trade deficit. In 2014, the devaluation of the Russian ruble triggered a nearly 40% devaluation of the Belarusian ruble. Belarus's economy stagnated between 2012 and 2016, widening productivity and income gaps with neighbouring countries.

Since 2015, the Belarusian government has tightened its macroeconomic policies, allowed more flexibility in its exchange rate, taken steps towards price liberalisation, and reduced subsidised government lending to state-owned enterprises. Belarus returned to modest growth in 2017, largely driven by the improvement of external conditions.

Belarus has an inefficient and outdated industrial base, and its economy is heavily dependent on subsidised Russian energy and preferential access to Russian markets. The country's agricultural base is largely dependent on government subsidies. Belarus has small reserves of crude oil and imports most of its oil and gas from Russia at subsidised, below-market prices.

The country has experienced significant financial distress due to its dependence on Russia, particularly during the Russian financial and economic crisis in 1998 and 1999. Belarus has also struggled with high external debt servicing payments and a trade deficit.

The Belarusian government has tightened its macroeconomic policies, allowed more flexibility in its exchange rate, and reduced subsidised government lending to state-owned enterprises. However, the country continues to face challenges, including high external debt, a trade deficit, and limited foreign investment.

Belarus's post-Soviet transition economy has been characterised by a mix of centralised political and economic controls, dependence on key industries, and struggles with external debt and trade deficits. The country has experienced periods of growth and financial distress, and its future economic trajectory remains to be seen.

Belarus has a highly centralised economy that emphasises full employment

Belarus has an upper-middle-income, highly centralised, mixed economy. As a post-Soviet transition economy, Belarus rejected privatisation efforts in favour of retaining centralised political and economic controls by the state. The economy emphasises full employment and a dominant public sector, and has been described as a welfare state or market socialist.

The Belarusian economy is heavily reliant on its close political and economic ties with Russia. Belarus benefits from subsidised Russian energy and preferential access to Russian markets. The country refines Russian crude oil and sells it at market prices, and about 80% of its industry remains in state hands. The government also subsidises agriculture and communal farms.

The country's economic output declined for several years following the break-up of the Soviet Union, but revived in the mid-2000s. Belarus returned to modest growth in 2017, largely driven by an improvement in external conditions. However, Belarus's economy stagnated between 2012 and 2016, widening productivity and income gaps between Belarus and neighbouring countries. Since 2015, the Belarusian government has tightened its macroeconomic policies, allowed more flexibility in its exchange rate, taken some steps towards price liberalisation, and reduced subsidised government lending to state-owned enterprises.

The country's central bank, the National Bank of Belarus, has also played a role in the country's economic situation. In the early 2010s, it was forced to spend $1 billion of its foreign reserves to balance the supply and demand of currency. In 2011, a financial crisis led to a nearly threefold devaluation of the Belarusian ruble. In 2021, the National Bank of Belarus introduced a free exchange market session to determine a market value for the ruble.

Belarus has a well-developed public health system

The Belarusian healthcare system has seen substantial changes and improvements in recent years, including to its structural and organizational foundation, as well as its financial mechanisms. The country has 609 inpatient healthcare institutions and 1,432 outpatient healthcare institutions, 17 national applied science centres, and another applied science centre in Minsk.

Belarus has a high number of medical professionals per capita. In 2019, the availability of practitioner medics per 10,000 people in the country was 45.6, higher than in the European Union (33.4) and the CIS states (38.1). Similarly, the availability of nurses per 10,000 people in Belarus was 134.4 in 2019, considerably higher than in the EU (86.8) and the CIS (62).

The country has also been introducing high technologies in maternity hospitals and perinatal centres, with an effective system to protect the health of mothers and children. Infant and maternal mortality rates are very low, comparable to those in the most developed nations.

Belarus has a low infant mortality rate of 2.9, compared to 6.6 in Russia and 3.7 in the United Kingdom. The country also has a high rate of doctors per capita, with 40.7 doctors per 10,000 inhabitants (compared to 26.7 in Romania, 32 in Finland, and 41.9 in Sweden).

The Belarusian healthcare system is currently undergoing digitalisation, with the development of a single digital platform for all hospitals and polyclinics in the country. This platform will include electronic prescriptions, medical history, and clinical records, with users able to access various services and advice through their personal accounts.

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