POLITICAL RISK - EU Schisms
Belarusian authorities have continued to arrest activists following widespread protests against the government in the aftermath of disputed elections back in December 2010. In early March, three men were sentenced to at least 3 years in a high-security facility, one of whom was reportedly the press spokesperson for former presidential candidate Andrei Sannikov. The ongoing crackdown on political opposition and disregard for international criticism concerning apparent police brutality will likely deepen divisions between Belarus and the West. Relations with the EU look set to remain particularly poor over the medium term
Our short-term political risk rating remains at 62.5.
ECONOMIC RISK - Inflation Surging
Consumer price inflation hit 13.0% y-o-y in February according to the National Statistical Committee of the Republic of Belarus, up from 9.9% at the end of last year. We expect inflationary pressures to remain high this year owing to our outlook for a further sell-off in the Belarusian ruble (which will result in imported inflation) and the knock-on effects of rapid credit growth over the past twelve months. That said, we anticipate that the government will seek to curb credit growth at some point this year. We see inflation ending 2011
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