BAKU, Azerbaijan, June 3
By Tamilla Mammadova – Trend:
Georgia's GDP contracted by 4.2 percent in annual terms in the 1Q2021, the ISET-PI, a think-tank based at the International School of Economics of Tbilisi State University told Trend.
"However, it is notable that based on the rapid estimate of the National Statistics Office of Georgia, Georgia's real GDP grew by 44.8 percent in April," the source noted.
"This unexpectedly high growth rate partially can be explained by the fact that Georgia had a very difficult epidemiological situation and strict lock-down and social distancing measures (including lock-down, a temporary ban of public and private transportation and etc.) in April 2020 and due to that Georgia's real GDP contracted by 16.6 percent compared to April 2019 (low base effect)," the ISET-PI added.
Nevertheless, real GDP in April 2021 still grew by about 20 percent compared to 2019, the source said.
"The other factors explaining high growth are notably increased export (19.6 percent year-on-year) and external merchandise trade turnover (12.8 percent year-on-year) and generous government support programs (to cope with negative effects of COVID-19 pandemic, Georgian government dramatically increased government debt. Hence, government debt to GDP ratio now exceeds 60 percent). Estimated annual real Gross Domestic Product (GDP) growth rate from January through April of 2021 amounted to 8.1 percent," the ISET-PI said.
"In our recent forecast, we expected Georgia's real GDP to grow by 12.2 percent yearly in the second quarter of 2021 (the forecast was done before releasing new information about the rapid estimate of economic growth for April 2021)," the source noted.
According to the company, the annual growth in 2021, based on March data, was expected to be 3.9 percent in the worst-case scenario, and 4.3 percent in the best-case or an average long-term growth scenario.
"Our middle-of-the-road scenario (based on the average growth in the last four quarters) predicts a 4 percent increase in real GDP. However, we are planning to revise our quarterly and annual forecast up notably (when our econometric model takes into consideration unexpectedly high growth figures in April 2021). In addition, the Georgian government has already revised its annual GDP growth forecast (for 2021) up from 4.3 percent to 6.5 percent," the source added.
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