Disinflation To Run Into 2010

Belarus is set to experience further disinflation in 2009 and 2010, and we forecast end-2009 and end-2010 CPI growth rates of 10.0% and 9.0% y-o-y, respectively. This process will be driven by the ongoing contraction of aggregate demand. That said, we caution that the sharp currency devaluation seen between November 2008 and March 2009 coupled to the ongoing marketisation of Russian gas import prices will serve to maintain a degree of upside pressure on headline inflation.

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