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IMF cuts forecast for Belarus’ economic growth

The International Monetary Fund (IMF) has revised downward its forecast for Belarus’ economic growth in 2014 to just 0.9 percent.

This past April, the international financial organization said that it expected the country’s Gross Domestic Product to grow by 1.6 percent this year.

In a statement issued earlier this week, the IMF said that its outlook was for “continued slow growth and persistent external imbalances, but risks are high and tilted to the downside.”

“With weak Russian growth weighing on external demand and with domestic demand slowing, only 0.9 percent GDP growth is expected this year, while inflation is forecast to remain around 16 percent,” said the statement.

The IMF noted that Belarus was projected to have a current account deficit 8.75 percent of GDP in 2014 “on weak external demand, low competitiveness, and a policy mix that continues to be too loose.”

The institution urged the Belarusian authorities to deepen structural reforms to eliminate constraints to higher and sustainable growth.

It expressed concern about what it described as high pay growth in Belarus in recent years, and warned that pay growth should be kept “aligned with productivity improvement to avoid fueling inflation and regain competitiveness.”

The IMF also called on the Belarusian government to scale back foreign exchange intervention to allow greater exchange rate flexibility needed to strengthen competitiveness.

Belarus’ GDP reportedly rose by 1.2 percent year-on-year in the first six months of this year.

The government projected a GDP growth rate of 3.3 percent for 2014.