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| Why to enter this market? |
- Low employment costs
- Springboard for operations in Russia
- Domestic market of 10 million people
- Located between Western Europe and Russia
- Expertise in some industries
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Business and economic environment
Belarus is an unusual mixture of an authoritarian state, in which personal freedoms and human rights are very limited, elections are far from free and opposition presidential candidates end up in labour camps after losing elections, and an economy which grew by 8% on average between 2000 and 2008, industries with traditions going back to the Soviet era, low employment costs and a strategic location between Western Europe and Russia. The country has witnessed investors opening joint ventures with local partners (usually state-owned) such as the Man partnership, which produces lorries, and Maz, a manufacturer of construction equipment. The country is still operating within the confines of a command economy but is drifting toward a transitional form as an increasing number of elements of the free market cross its borders.
Like Russia and Ukraine, Belarus has a relatively high corporate tax rate, of 24%.
In 2010, the monetary value of Belarusian foreign trade in terms of exported goods reached EUR 17.75bn in current prices, whereas imports were worth EUR 21.6bn. The balance of international trade reached EUR -3.85bn. In 2009, there was a slight reduction in both exports and imports (exports: EUR 15.4 bn; imports: EUR 20.5), but overall exports increased more rapidly than imports, and the trade deficit therefore shrank from EUR -5bn in 2009 to EUR -3.85bn in 2010. FDI (Foreign Direct Investment) in the Belarusian economy came to EUR 1.36bn in 2009.
Inflation in Belarus fell to 7% in 2010, in comparison with 12.9% in 2009. Corruption is one of the most serious problems faced by those investing and operating in Belarus. The level of perception in 2010 was recorded by Transparency International as 2.5 on the CPI (Corruption Perception Index), and the country was ranked 127th of the 180 surveyed, whereas CPI stood at 2.4 during the previous year and the country was ranked 139th.
Belarus’ GDP grew constantly by 8% per annum on average between 2000 and 2008. This was driven by the improving export climate, both to Russia and the EU, increasing labour productivity, energy efficiency, state investment programmes, the preferential funding of state-supported industries and sales of gas, crude oil and electricity heavily subsidised by Russia. The latter has been particularly important, as the country has few deposits of fossil fuels and as much as 80% of its demand in this group of goods is met by imports from Russia. In 2009, growth slowed to 0.2% as a result of the global economic downturn but picked up again in 2010, with 7.6% estimated by the IMF.
Industrial production increased by 10.5% in 2010 in comparison with the previous year. Furthermore, industry in Belarus has been growing at a similar rate over the past five years (8.7% in 2007 and 11% in 2008), with the exception of 2009, when industrial growth stalled.
The official unemployment rate in Belarus was 1% in 2010. However, it must be emphasised that the Belarusian state keeps to a policy of full employment typical of command economies and that there are many people who are employed but who earn very modest incomes.
Among the most attractive areas of the Belarusian economy, the following stand out:
- Automotive (heavy vehicles)
- Wood processing
- Chemical and petrochemical industry
- Machine building
- Logistics
- Communication and telecommunication
- Fuel and energy
- Agriculture
- Food production
Social environment
In 2010, the population of Belarus was 9,57m and the average age was 39. However, the figures for men and women differ: 36.1 for men and 42.1 for women. In Belarusian society there are 14% more women than men. In terms of nationality, the major groups are: Belarusians 81.2%, Russians 11.4%, Poles 3.9%, Ukrainians 2.4% and others 1.1%.
With regard to education, Belarus has a well-developed infrastructure inherited from the Soviet era. The country has seven universities (general and technical), in addition to a number of other educational institutes. Despite its Soviet past, approximately 80% of the population claim that they are Eastern Orthodox. The average salary in Belarus was EUR 291 in 2008, a 23% increase in comparison with 2007. In Q1 2009, the average salary stated in EUR was EUR 251.
Infrastructure and technological environment
It must be emphasised that despite the collapse of the Soviet Union in 1991, the country still operates as a command economy and maintains industries which were developed there during the Soviet era, either because of locally available resources (the timber industry and aggregate mining) or because of a centrally made decision, for example, specialisation in the manufacture of lorries, construction machinery and heavy vehicles used in open pits. Control by Moscow was fostered, particularly because Belarus maintained close links with Russia and its economy.
The Belarusian electricity system is mostly gas-fired and provides the country with approximately 85% of its demand, whereas the remaining 15% is imported from Russia, Ukraine and Lithuania. Despite the fact that it is a former Soviet republic, Belarus has no nuclear power station of its own. However, it benefits from the excessive capacity of Ukrainian units. The country is also important in terms of energy logistics, as it lies on the gas transit route from Russia to Western Europe. In future, it is also expected that one of the solutions to the country’s shortage of renewable energy sources might be its huge stock of timber.
Almost 46% of Belarusians had access to the internet in June 2010, a considerable achievement, as the figure was 14% in 2003. The mobile telephony penetration rate reached 101.1% in 2010.
The transport network in Belarus consists of 5,512 km of wide gauge railways and 70,000 km of paved roads. The Berlin-Moscow transport corridor passes through Belarus, and a 606 km stretch of this is located on the country’s territory and consists of dual carriageway or motorway. There are 8 civilian airports in Belarus, of which only that in Minsk is international.
Political environment
Belarus is an authoritarian state which combines the remnants the internal government system of a Soviet republic and a presidential system. The head of state is a president who appoints the prime minister. The bicameral parliament represents legislative power, but the president may rule by decree, and this carries the same weight as parliamentary votes.
Belarus is a state in which personal freedoms and human rights are limited. The suppression of the opposition, the lack of press freedom, a gulag-like prison system and election results which are frequently criticised by independent observers are a fact of life. However, the country has an evolving market economy, and people have access to independent views via the internet and foreign media.
The country is a member of all major international organisations.
General data
Area: 207,600 sq km
Population: 9.57 m (2010)
Capital: Minsk
Language: Belarusian, Russian
Ethnic groups: Belarusians 81.2%, Russians 11.4%, Poles 3.9%, Ukrainians 2.4% and others 1.1%
National boundaries: Latvia 171 km, Lithuania 680 km, Poland 605 km, Russia 959 km, Ukraine 891 km
Major economic indicators
| |
2007 |
2008 |
2009 |
2010 |
2011f |
| GDP (EUR bn) |
32.3 |
42.3 |
42.3 |
45.5 |
48.6 |
| Population (m) |
9.69 |
9.67 |
9.57 |
9.57 |
9.57 |
| GDP per capita (EUR) |
3385 |
4230 |
4075 |
4384 |
4687 |
| GDP (constant prices y-o-y %) |
8.6 |
10.2 |
0.2 |
7.6 |
6.9 |
| Exports, real, (% GDP) |
53.8 |
54 |
43.4 |
46.3 |
51.3 |
| Imports, real, (% GDP) |
-62.7 |
-64.3 |
-57.5 |
-63.2 |
-62.9 |
| CPI (average, y-o-y %) |
12.1 |
13.3 |
11.5 |
12 |
|
| Central bank reference rate |
10 |
12 |
14 |
|
|
| Monthly wage, nominal (EUR) |
235 |
291 |
251 |
273 |
|
| Unemployment rate (%) |
1.1 |
1.6 |
1 |
1 |
|
| Net FDI (EUR bn) |
0.96 |
1.53 |
1.36 |
|
|
| FDI % GDP |
3 |
4 |
3.2 |
|
|
| FX reserves (EUR bn) |
3.3 |
2.47 |
2.52 |
2.52 |
|
| Exchange rate to USD AVG |
2148 |
2149 |
2772 |
3014 |
3027.75 |
| Exchange rate to EUR AVG |
2958 |
3045 |
3624 |
3800 |
4900 |
Last update: Q1 2011
Useful data
Currency: BYR
Exchange rate: BYR 1 = EUR 0,00024 (Q1 2011)
Time zone: GMT +2
Area code: +375
If you would like to find out more on the Belarussian market opportunities please do not hesitate to contact us directly:
phone: (48 12) 292 22 50
faks (48 12) 292 22 99
e-mail: info@pmrconsulting.com
PMR Business Solutions in Belarus
Market reports Belarus
To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Belarus.
If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs.
Consulting in Belarus
PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
Market research in Belarus
PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses.
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