ISET

The COVID-19 outbreak has negatively affected the Georgian economy through reduction in FDI, exports of goods and services, and remittances. In addition, uncertainties caused by the pandemic and containment measures hit consumption and domestic investment. As a result of this reduction in aggregate demand, combined with increased production costs due to pandemic-related constraints, GDP is expected to contract by 5% in 2020 according to NBG’s latest monetary report. The growth estimate has been revised downward since May, when NBG’s forecast stood at -4%. The revision was driven by weaker-than-previously-anticipated external demand, which is mainly caused by delays in the resumption of international flights. According to an alternative scenario, in which pandemic-related restrictions remain in place the whole year, a 6.5% decrease in GDP is expected in 2020.

The strict containment imposed by the government in late March and April (needed to prevent the spread of the virus) drove various forms of economic activity (especially tourism) to a standstill. According to GeoStat’s latest estimates of GDP growth, Georgia’s economy shrank by 12.6% y/y in the second quarter of 2020.

Fiscal stimulus combined with gradual easing of monetary policy, improved credit activity, and better-than-expected remittances helped to mitigate a deeper impact from COVID-19 in the second quarter. However, the rebound in domestic demand was overbalanced by weaker external demand, as international travel remains broadly banned and Georgia has opened its borders to only a few countries.

Download the full report

 

More Macro Review Articles

  • Quarter 2 2020, Macro Review | In the Eye of the Hurricane: Georgia’s Economic Performance from April to June 2020

    The COVID-19 outbreak has negatively affected the Georgian economy through reduction in FDI, exports of goods and services, and remittances. In addition, uncertainties caused by the pandemic and containment measures hit consumption and domestic investment. As a result of this reduction in aggregate demand, combined with increased production costs due to pandemic-related constraints, GDP is expected to contract by 5% in 2020 according to NBG’s latest monetary report. The growth estimate has been revised downward Read More
  • Quarter 1 2020, Macro Review | Early signs of pandemic

    In March 2020 as a result of the COVID-19 pandemic, the global economy started to sink into what is expected to be the deepest worldwide recession since World War II. Despite unprecedented policy support, the majority of countries have failed to soften the fallout from the crisis. According to World Bank estimates, global GDP will contract by 5.2% year over year (y/y) in 2020. The United States and Euro Area are projected to shrink by Read More
  • Quarter 4 2019, Macro Review | The 2019 Georgian economy – a year in review

    According to Geostat, the 2019 real GDP growth in Georgia was 5.1% year-over-year (YoY). This figure moderately surpassed NBG’s, ADB’s, EBRD’s, IMF’s and the World Bank’s latest growth projections for 2019, which range from 4.5%-4.7%. However, the real winner in this race was ISET-PI’s annual GDP growth forecast; in May 2019, we predicted a 4.9% annual growth. Although 2019 may now seem like the distant past in light of the coronavirus epidemic, it is worth Read More
  • 1
  • 2
  • 3
  • 4

Our Partners