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

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 ongoing crisis in Ukraine will ensure support for President Alexander Lukashenko remains robust in the run up to the 2015 presidential election. Opinion polls indicate voters prefer the stability engendered by the regime to the uncertainty following the ousting of the president, and we believe the government will continue to divide its focus between closer Russian and EU relations.

* The Belarusian economy will receive a boost over the remainder of 2014 and into 2015 as agricultural exports to Russia increase in the wake of the Kremlin's ban on Western food imports. Nevertheless, the damage done to the Russian economy by the tit-for-tat sanctions will feed through into declining investment into Belarus and a fall in export demand beyond the initial one-year timeframe for the import ban.

  • Consumer price inflation in Belarus...

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Belarus Operational Risk Coverage (8)

Belarus Operational Risk

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Our Operational Risk Index indicates that the business environment in Belarus faces moderate risks. Labour market dynamics are fairly strong, owing to an urbanised, highly educated workforce. Crime and security concerns are fairly low due to the tight control of the Lukashenko government. However, these benefits are offset by a weak trade and investment picture, with high government intervention in the economy and an underdeveloped banking sector. The logistics network lacks diversification, focusing to a large degree on hydrocarbons trade with Russia, although the country's position offers opportunities in east-west and north-south rail links.

We highlight the relatively favourable labour market dynamics as a key benefit to investors. The labour force is large, urbanised and highly educated, with high levels of literacy and numeracy. As a result, businesses have a sizeable pool of talented workers from which to draw. However, high employer...

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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...

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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...

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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,...

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Belarus Industry Coverage (5)

Defence & Security

Belarus Defence & Security

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BMI View: In 2014 we expect that Belarus will continue to align its security and economy with Russia, even though Belarus has entered into increasing amounts of talks with Western European nations. That said the two countries are currently embroiled in a dispute over the break-up and a joint venture in the potash industry, which has resulted in Russia taking punitive action which will damage the Belarusian economy.

President Alexander Lukashenko will remain in power over the long-term as opposition parties remain ineffective under state repression. In the 2012 parliamentary election, no opposition candidates were elected and a number of parties boycotted proceedings. The Belarusian military will remain well funded, but its hardware is out of date and due to conscription and Russian troops...

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Food & Drink

Belarus Food & Drink

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BMI View:   The Belarusian economy will receive a boost over the remainder of 2014 and into 2015 as agricultural exports to Russia increase in the wake of the Kremlin's ban on Western food imports. However, the increased food exports to Russia are expected to maintain the consumer price inflation elevated on the back of food supply shortages thus suppressing private consumption growth .

Headline Industry Data

  • Food consumption value (local currency) growth (y-o-y) in 2014: +18.2%; compound annual growth rate (CAGR) to 2018: +14.3%

  • Per capita food consumption value (local currency) growth (y-o-y) in 2014: +18.8%; CAGR to 2018: +14.8%

  • Alcoholic drinks value (local currency) sales growth (y-o-y) in 2014: +24.3%; CAGR to 2018...

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Medical Devices

Belarus Medical Devices

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Espicom Industry View: Th e Belarus ian medical device market is under-developed and heavily reliant on imports. Per capita device expenditure is one of the lowest in Europe at US$43 . The outlook for the Belarusian medical device market is mixed, with robust growth projected in local currency terms, but due to the expected depreciation of the Belarusian ruble, the market is forecast to fall in value in US dollar terms. Measured in US dollars, the market is projected to fall at a CAGR of 0.9% over the 2013-2018 period.

Headline Industry Forecasts

  • In 2013, the medical device market was estimated at US$398.3mn, or just under US$43...

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Pharmaceuticals & Healthcare

Belarus Pharmaceuticals & Healthcare

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BMI View: The Belarusian economy is set to suffer a prolonged period of economic instability as a result of a decline in global potash prices and an escalating trade war with Russia. If Russo-Belarusian relations cannot be patched up, state revenues are set to decline considerably, the net exports deficit will widen significantly and real GDP growth will decline. There are downside risks to our 2014 forecast, owing to the threat of further currency depreciation, a collapse in exports and absolute erosion of consumer purchasing power. With the balance of the Belarusian economy once more on knife's edge, Belarus will present little reward for high risk for most pharmaceutical companies in the region.

Headline Expenditure Projections

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Telecommunications

Belarus Telecommunications

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Executive Summary

BMI View: The heavy presence of the government in the Belarusian telecoms market continues to hold it back, leaving it as one of the more underdeveloped in the region. During the 2014 update, this was highlighted by the licensing of beCloud to provide a singular LTE network for the country. While this is a positive move in that it cuts costs for operators and prevents duplication of infrastructure, beCloud is part-owned by the state and could therefore pose s problems for private companies in the market. This highlights the problems of doing business in the country and results in a telecoms sector which lacks investment, leading to delays in the latest technology and some of the lowest ARPU rates in the region. If...

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