Macroeconomic Policy in Belarus after Currency Crisis: Challenges and Perspectives (in Russian)

This paper deals with economic policy in Belarus after the currency crisis of 2011. There was a trade-off between the desire of the government to soften economic policy given cyclical recession and high and volatile inflation expectations. In the first half of 2012, the choice was made in favor of enhancing financial stability: the output grew mainly due to foreign demand, which was crucial for macroeconomic equilibrium. Furthermore, a positive shock in foreign trade allowed domestic demand to grow somehow. However, when the positive shock exhausted, the government changed a policy mix and shifted the economy to the regime of catch-up growth. The latteê led to the waste of advantages in price competitiveness obtained due to the currency crisis of 2011, and the country returned to the pre-crisis trajectory of output growth. It is argued, that this trajectory is much more dangerous than before, as it generates lower growth at the background of rapidly progressing external imbalances. Structural reforms seem to be the only option to break the vicious circle.