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Belarus vs. Latvia

Economy

BelarusLatvia
Economy - overview

As part of the former Soviet Union, Belarus had a relatively well-developed industrial base, but it is now outdated, inefficient, and dependent on subsidized Russian energy and preferential access to Russian markets. The country's agricultural base is largely dependent on government subsidies. Following the collapse of the Soviet Union, an initial burst of economic reforms included privatization of state enterprises, creation of private property rights, and the acceptance of private entrepreneurship, but by 1994 the reform effort dissipated. About 80% of industry remains in state hands, and foreign investment has virtually disappeared. Several businesses have been renationalized. State-owned entities account for 70-75% of GDP, and state banks make up 75% of the banking sector.

Economic output declined for several years following the break-up of the Soviet Union, but revived in the mid-2000s. Belarus has only small reserves of crude oil and imports crude oil and natural gas from Russia at subsidized, below market, prices. Belarus derives export revenue by refining Russian crude and selling it at market prices. Russia and Belarus have had serious disagreements over prices and quantities for Russian energy. Beginning in early 2016, Russia claimed Belarus began accumulating debt - reaching $740 million by April 2017 - for paying below the agreed price for Russian natural gas and Russia cut back its export of crude oil as a result of the debt. In April 2017, Belarus agreed to pay its gas debt and Russia restored the flow of crude.

New non-Russian foreign investment has been limited in recent years, largely because of an unfavorable financial climate. In 2011, a financial crisis lead to a nearly three-fold 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 mid-December 2014, the devaluation of the Russian ruble triggered a near 40% devaluation of the Belarusian ruble.

Belarus's economy stagnated between 2012 and 2016, widening productivity and income gaps between Belarus and neighboring countries. Budget revenues dropped because of falling global prices on key Belarusian export commodities. Since 2015, the Belarusian government has tightened its macro-economic policies, allowed more flexibility to its exchange rate, taken some steps towards price liberalization, and reduced subsidized government lending to state-owned enterprises. Belarus returned to modest growth in 2017, largely driven by improvement of external conditions and Belarus issued sovereign debt for the first time since 2011, which provided the country with badly-needed liquidity, and issued $600 million worth of Eurobonds in February 2018, predominantly to US and British investors.

Latvia is a small, open economy with exports contributing more than half of GDP. Due to its geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronics industries. Corruption continues to be an impediment to attracting foreign direct investment and Latvia's low birth rate and decreasing population are major challenges to its long-term economic vitality.

Latvia's economy experienced GDP growth of more than 10% per year during 2006-07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the slowing world economy. Triggered by the collapse of the second largest bank, GDP plunged by more than 14% in 2009 and, despite strong growth since 2011, the economy took until 2017 return to pre-crisis levels in real terms. Strong investment and consumption, the latter stoked by rising wages, helped the economy grow by more than 4% in 2017, while inflation rose to 3%. Continued gains in competitiveness and investment will be key to maintaining economic growth, especially in light of unfavorable demographic trends, including the emigration of skilled workers, and one of the highest levels of income inequality in the EU.

In the wake of the 2008-09 crisis, the IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro in exchange for the government's commitment to stringent austerity measures. The IMF/EU program successfully concluded in December 2011, although, the austerity measures imposed large social costs. The majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises, including 80% ownership of the Latvian national airline. Latvia officially joined the World Trade Organization in February 1999 and the EU in May 2004. Latvia also joined the euro zone in 2014 and the OECD in 2016.

GDP (purchasing power parity)$181.286 billion (2019 est.)

$179.098 billion (2018 est.)

$173.63 billion (2017 est.)

note: data are in 2010 dollars
$59.102 billion (2019 est.)

$57.912 billion (2018 est.)

$55.672 billion (2017 est.)

note: data are in 2010 dollars
GDP - real growth rate1.22% (2019 est.)

3.17% (2018 est.)

2.53% (2017 est.)
2.08% (2019 est.)

4.2% (2018 est.)

3.23% (2017 est.)
GDP - per capita (PPP)$19,150 (2019 est.)

$18,885 (2018 est.)

$18,280 (2017 est.)

note: data are in 2010 dollars
$30,898 (2019 est.)

$30,050 (2018 est.)

$28,664 (2017 est.)

note: data are in 2010 dollars
GDP - composition by sectoragriculture: 8.1% (2017 est.)

industry: 40.8% (2017 est.)

services: 51.1% (2017 est.)
agriculture: 3.9% (2017 est.)

industry: 22.4% (2017 est.)

services: 73.7% (2017 est.)
Population below poverty line5% (2019 est.)22.9% (2018 est.)
Household income or consumption by percentage sharelowest 10%: 3.8%

highest 10%: 21.9% (2008)
lowest 10%: 2.2%

highest 10%: 26.3% (2015)
Inflation rate (consumer prices)5.6% (2019 est.)

4.8% (2018 est.)

6% (2017 est.)
2.8% (2019 est.)

2.5% (2018 est.)

2.9% (2017 est.)
Labor force4.381 million (2016 est.)885,000 (2020 est.)
Labor force - by occupationagriculture: 9.7%

industry: 23.4%

services: 66.8% (2015 est.)
agriculture: 7.7%

industry: 24.1%

services: 68.1% (2016 est.)
Unemployment rate0.8% (2017 est.)

1% (2016 est.)

note: official registered unemployed; large number of underemployed workers
6.14% (2019 est.)

6.51% (2018 est.)
Distribution of family income - Gini index25.2 (2018 est.)

21.7 (1998)
35.6 (2017 est.)

35.4 (2014)
Budgetrevenues: 22.15 billion (2017 est.)

expenditures: 20.57 billion (2017 est.)
revenues: 11.39 billion (2017 est.)

expenditures: 11.53 billion (2017 est.)
Industriesmetal-cutting machine tools, tractors, trucks, earthmovers, motorcycles, synthetic fibers, fertilizer, textiles, refrigerators, washing machines and other household appliancesprocessed foods, processed wood products, textiles, processed metals, pharmaceuticals, railroad cars, synthetic fibers, electronics
Industrial production growth rate5.6% (2017 est.)10.6% (2017 est.)
Agriculture - productsmilk, potatoes, sugar beet, wheat, triticale, barley, maize, rye, rapeseed, poultrywheat, milk, rapeseed, barley, oats, potatoes, rye, beans, pork, poultry
Exports$28.65 billion (2017 est.)

$22.98 billion (2016 est.)
$20.444 billion (2019 est.)

$20.007 billion (2018 est.)

$19.153 billion (2017 est.)
Exports - commoditiesrefined petroleum, fertilizers, cheese, delivery trucks, crude petroleum (2019)lumber, broadcasting equipment, whiskey and other hard liquors, wheat, packaged medicines (2019)
Exports - partnersRussia 42%, Ukraine 13%, United Kingdom 7% (2019)Lithuania 16%, Estonia 10%, Russia 9%, Germany 7%, Sweden 6%, United Kingdom 6% (2019)
Imports$31.58 billion (2017 est.)

$25.61 billion (2016 est.)
$22.049 billion (2019 est.)

$21.397 billion (2018 est.)

$20.096 billion (2017 est.)
Imports - commoditiescrude petroleum, natural gas, cars and vehicle parts, packaged medicines, broadcasting equipment (2019)refined petroleum, broadcasting equipment, cars, packaged medicines, aircraft (2019)
Imports - partnersRussia 57%, China 7%, Poland 5%, Germany 5%, Ukraine 5% (2019)Russia 21%, Lithuania 14%, Germany 9%, Poland 7%, Estonia 7% (2019)
Debt - external$39.847 billion (2019 est.)

$39.297 billion (2018 est.)
$40.164 billion (2019 est.)

$42.488 billion (2018 est.)
Exchange ratesBelarusian rubles (BYB/BYR) per US dollar -

1.9 (2017 est.)

2 (2016 est.)

2 (2015 est.)

15,926 (2014 est.)

10,224.1 (2013 est.)
euros (EUR) per US dollar -

0.82771 (2020 est.)

0.90338 (2019 est.)

0.87789 (2018 est.)

0.885 (2014 est.)

0.7634 (2013 est.)
Fiscal yearcalendar yearcalendar year
Public debt53.4% of GDP (2017 est.)

53.5% of GDP (2016 est.)
36.3% of GDP (2017 est.)

37.4% of GDP (2016 est.)

note: data cover general government debt, and includes debt instruments issued (or owned) by government entities, including sub-sectors of central government, state government, local government, and social security funds
Reserves of foreign exchange and gold$7.315 billion (31 December 2017 est.)

$4.927 billion (31 December 2016 est.)
$4.614 billion (31 December 2017 est.)

$3.514 billion (31 December 2016 est.)
Current Account Balance-$931 million (2017 est.)

-$1.669 billion (2016 est.)
-$222 million (2019 est.)

-$99 million (2018 est.)
GDP (official exchange rate)$63.168 billion (2019 est.)$34.084 billion (2019 est.)
Credit ratingsFitch rating: B (2018)

Moody's rating: B3 (2018)

Standard & Poors rating: B (2017)
Fitch rating: A- (2014)

Moody's rating: A3 (2015)

Standard & Poors rating: A+ (2020)
Ease of Doing Business Index scoresOverall score: 74.3 (2020)

Starting a Business score: 93.5 (2020)

Trading score: 96.5 (2020)

Enforcement score: 67.6 (2020)
Overall score: 80.3 (2020)

Starting a Business score: 94.1 (2020)

Trading score: 95.3 (2020)

Enforcement score: 73.5 (2020)
Taxes and other revenues40.7% (of GDP) (2017 est.)37.5% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)2.9% (of GDP) (2017 est.)-0.5% (of GDP) (2017 est.)
Unemployment, youth ages 15-24total: 10.2%

male: 12.9%

female: 7.3% (2019 est.)
total: 12.4%

male: 14.2%

female: 10.1% (2019 est.)
GDP - composition, by end usehousehold consumption: 54.8% (2017 est.)

government consumption: 14.6% (2017 est.)

investment in fixed capital: 24.9% (2017 est.)

investment in inventories: 5.7% (2017 est.)

exports of goods and services: 67% (2017 est.)

imports of goods and services: -67% (2017 est.)
household consumption: 61.8% (2017 est.)

government consumption: 18.2% (2017 est.)

investment in fixed capital: 19.9% (2017 est.)

investment in inventories: 1.5% (2017 est.)

exports of goods and services: 60.6% (2017 est.)

imports of goods and services: -61.9% (2017 est.)
Gross national saving27.8% of GDP (2019 est.)

29.2% of GDP (2018 est.)

28% of GDP (2017 est.)
21.7% of GDP (2019 est.)

23.5% of GDP (2018 est.)

23.4% of GDP (2017 est.)

Source: CIA Factbook