ISET-PI has updated its real GDP growth forecast for the first and second quarters of 2023. Here are the highlights of this month’s release: 

The real GDP growth rate amounted to 8.4% year-on-year for January 2023.

As a result of the update, the growth forecast for Q1 of 2023 was reduced by 0.1 percentage points to 2.6%. ISET PI’s second forecast for Q2 of 2023 puts GDP growth at a positive 1.6%.

Based on January data, the annual growth in 2023 is expected to be 2% in the worst-case scenario, and 3% in the best-case or average long-term growth scenario. Our middle-of-the-road scenario (based on the average growth in the last four quarters) predicts a 2.4% increase in real GDP.

These numbers are most likely underestimated by the model at the current point in time. This is due to the fact that ongoing large-scale in-migration had not had relevant analogues in the Georgian data in the past.

According to the recent Monetary Policy Report of the National Bank of Georgia (NBG), the real economic growth forecast for 2023 is expected to reduce at 4%. This growth slowdown is driven by the backdrop of reduced migration inflows and the expected slowdown of global economic growth.