In January-April 2020 Belarus industrial output declined 3.8% year on year as the double whammy of the oil price collapse and the coronavirus (COVID-19) stop-shock hit home.

Belarus has been more affected by the fall in the oil prices, as President Alexander Lukashenko has refused to take the pandemic seriously and Minsk is one of the few cities in the region that was not put on lockdown. The football league is still running and on May 9 the country held a few military parades to celebrate VE day.

A lot of the pain felt by the Belarusian economy has been transmitted from Russia, which is still the country’s major economic partner.

The most significant output loss in y/y terms occurred in the oil refining (-32.3%), chemical (-15.9%) and dump truck/tractor (-14.5%) producing sectors.

At the same time, positive growth in pharmaceuticals (11.2%), wooden products (10.8%), cars and trucks (8%) and the food industry (4%) provided some support for the economy.

The construction sector was up 6.3%, and agriculture and retail trade increased by 5% and 4.7% respectively too.

Meanwhile, in order to support local producers, the National Bank of Belarus (NBB) adopted an easing policy by cutting the key interest rate by 0.75 pp to 8% effective as of 20 May.

“This notwithstanding, we expect the negative trends in the economy to intensify in Q2 owing to the COVID-19 impact,” said Olga Zhegulo, an analyst with Raiffeisen Bank (RZB).