BAKU, Azerbaijan, Oct. 6
By Maryana Akhmedova – Trend:
Georgia’s GDP growth rate for 2021 is now projected at 8 percent, up from 6 percent in April 2021, Europe and Central Asia Economic Update, Fall 2021 published by the World Bank said, Trend cites the report.
According to the report, the production output surpasses its 2019 level in 2021 in the baseline scenario. This assumes that some COVID-19 related restrictions will remain in effect for the rest of the year.
Georgian GDP growth is expected to return to its potential rate of about 5.0-5.5 percent over the medium term, as the fiscal stimulus winds down, monetary policy normalizes, and tourism recovers.
Meanwhile, the poverty rate is expected to decline and reach pre-crisis levels by 2022, as GDP growth recovers, and real wages increase, the World Bank said.
The baseline projection also assumes no major new COVID-19 restrictions in a context of rising vaccination rates.
The fiscal deficit is expected to remain high at around 7.6 percent of GDP in 2021 before gradually declining, as revenues recover and emergency spending decreases. The deficit is projected to narrow to about 3 percent of GDP by 2023 in line with the fiscal rule.
The World Bank forecasts inflation to remain above the Central Bank’s 3 percent target in 2021-2022, but to reach the target by the end of 2023 over the medium term, as transitory pressures decrease and monetary policy actions anchor inflationary expectations.
“The current-account deficit is expected to narrow to 10 percent of GDP in 2021 and continue shrinking over the medium term, as service exports recover and rebounding economic activity causes imports to rise," the World Bank said.
Recovering Foreign Direct Investment (FDI) and sustained support from international financial institutions are expected to cover Georgia’s external financing needs and help maintain a comfortable reserve cushion, the report said.
“Delayed vaccinations, new mobility restrictions, and prolonged political tensions are the key downside risks to Georgia’s outlook. These risks could slow the recovery and inhibit progress on poverty reduction and job creation,” the WB said.
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