If Russia Collapses, It Will Drag Another Country’s Economy Down With It – Intelligence Report
11 August 15:46
In the event of a financial and economic collapse, Russia will inevitably drag the Belarusian economy down with it; moreover, according to foreign intelligence estimates, a banking crisis in Russia would hit Minsk even harder than it would Moscow itself, the agencybelieves, reports "Komersant Ukrainian".
“The real sector of the economy will bear the brunt of the impact. Russian subsidiary banks primarily extend credit to large enterprises operating in the Russian market. If the financial crisis in Russia escalates into an economic downturn, demand for Belarusian goods will plummet. This will hit companies’ revenues, worsen the quality of banks’ loan portfolios, and simultaneously limit businesses’ access to new financing,” the intelligence agency believes.
The situation will be further complicated by a reduction in lending by Russian banks themselves. For a country where nearly two-thirds of exports go to Russia, this will be a serious blow.
Foreign intelligence analysts note that the next problem will be state financing. The weakening of the Russian banking system will make it harder for Belarusian banks to access foreign loans and the interbank market, and will also make it extremely difficult for Minsk to receive further financial support from Moscow. If the ability to refinance debts narrows, the regime will have to tap into its reserves.
“This will inevitably increase pressure on the Belarusian ruble. The devaluation of the Russian currency will quickly spill over to the Belarusian ruble. Even if the National Bank manages to prop up the exchange rate for a while, it is unlikely to be able to do so for long. A weaker ruble will be necessary to maintain the competitiveness of Belarusian goods in the Russian market,” the report states.
Depositor confidence remains a separate risk. News of problems at Russian banks could trigger a flight of deposits from Belarusian banks as well, which would further intensify pressure on the financial system and the currency market.
“A banking crisis in Belarus is unlikely to begin at the same time as the one in Russia. But due to the country’s dependence on the Russian economy, its consequences could prove to be much more severe and prolonged. This was already the case after the 1998 default, when Belarus continued to pay the price for the crisis Russia had experienced for several more years,” the report states.
For Minsk, the main threat is not the bankruptcy of Russian banks, but the collapse of economic ties with the country on which the current model of the Belarusian economy is virtually entirely dependent.
The intelligence report explains that a banking crisis in Russia will not lead to an immediate collapse of Belarus’s financial system. Subsidiaries of Russian banks control about a quarter of the assets in the Belarusian banking sector; they operate as separate legal entities, comply with the National Bank’s capital and liquidity requirements, and deposits are protected by the local deposit insurance system. Therefore, a direct domino effect seems unlikely.
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Both countries saw a decline in economic activity in the first quarter
Earlier, foreign intelligence reports indicated that the Russian economy entered a contraction in the first quarter of 2026, which is already affecting Belarus due to its high dependence on the Russian market. Both countries are experiencing a decline in economic activity, despite earlier optimistic forecasts.
According to first-quarter results, Belarus’s GDP decreased by 0.4%, and Russia’s by 0.3%. Both countries entered 2026 with optimistic forecasts: Minsk expected growth of 2.8%, and Moscow, 1.3%; however, the actual figures dashed those plans.
Among the key factors behind the decline was the Russian Central Bank’s tight monetary policy aimed at combating inflation. The increase in the discount rate led to higher borrowing costs for businesses and industry, which, in turn, slowed production in an already weakened economy.
Due to its deep dependence on the Russian market, Belarus also found itself under pressure from the economic crisis. The planned growth rate of 15% under the five-year program has effectively become unrealistic, while the risks of stagflation—a simultaneous decline in production and inflation—are rising.
Consumers are already feeling the effects: the price difference for a basket of goods between Belarus and Poland has narrowed significantly. If this trend continues, the Belarusian market may lose even its current price advantage.
Analysts note that even a potential end to the war will not guarantee a rapid recovery of the Russian economy due to accumulated structural problems. For Belarus, this could mean even deeper dependence on Moscow and increased displacement of local businesses by Russian capital.
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