Quarter 2 2018, Macro Review | A new kid on the block: strong export growth in the first half of 2018 driven by a surge in tobacco product sales.
18 September 2018

Georgia’s real GDP growth constituted a strong 5.5% year over year (YoY) in the second quarter (Q2) of 2018, according to the Geostat figures. Recently this year, IMF and World Bank upped their forecast of economic growth for Georgia from 4.2% to 4.5%. In August, the National Bank of Georgia (NBG) has also revised its forecast for 2018 from 4.8% to 5.5%. Meanwhile, ISET-PI expects annual growth in 2018 to be 6.3% YoY.

The second quarter’s buoyant mood is fueled in part by high economic growth rates in neighboring countries reflecting positive dynamics in external factors. The Armenia economy advanced 7.2% YoY in Q2 2018, following a 9.6% growth in the previous quarter. Azerbaijan (+1.3% YoY) and Russia (1.9% YoY) benefited from higher oil prices, while FIFA World Cup had an additional positive impact on the latter.

The Turkish economy was still growing by 5.2% YoY in the second quarter of 2018. Notwithstanding the relatively respectable figure, this was the weakest growth rate for Turkey since the last quarter of 2016. Weakened independence of the central bank, sharp depreciation of the lira, double-digit inflation, and emerging geopolitical threats were the main challenges for the Turkish economy going into the second half of 2018.