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3.0 Macro Economy
Georgia - Main Macro Indicators 2015 2016 2017 2018 2019*
GDP real growth (y/y, %)
3.0 2.6 4.8 4.8 5.1
GDP per capita (at current prices), 4,012.6 4,062.1 4,358.5 4,722.0 4,763.5 USD
GDP per capita (at current prices), GEL
9,109.4 9,613.9 10,933.9 11,968.0 13,428.9
GDP at current prices, (USD bn)
14.9 15.1 16.2 17.6 17.7
GDP at current prices, (GEL bn)
33.9 35.8 40.8 44.6 50.0
GDP deflator (y/y, %)
5.8 2.6 8.5 4.4 6.6
Source: Geostat
3.1 Macroeconomic overview
Renaissance Capital sees 3-6% GDP decline in Georgia this year
Georgian parliament budget committee forecasts 10.7% plunge in Q2 GDP
The economic decline in Georgia this year will be in the range of 3%-6%, investment bank Renaissance Capital has said after assessing the impact of the coronavirus (COVID-19) crisis on the country’s economy.
However, it stated that the rate of decline would depend on the size of the second wave of COVID-19 that hits the country.
As regards monetary policy, Renaissance Capital predicted that by the end of the year, Georgia’s central bank would continue to reduce its refinancing rate. Periodic currency interventions by the national lender would continue, it added. "The National Bank has reduced the refinancing rate by 0.25pp to 8.25%, which is part of a gradual program to soften the monetary policy rate,” analysts at the investment bank stated.
The central bank has emphasised that its monetary policy will remain tight in order to reduce inflationary expectations and return the inflation target to 3% in the first half of 2021.
Renaissance Capital said that there was an opportunity to continue to soften the monetary policy. It expected that the refinancing rate would be around 6.5% by the end of 2020, with gradual mitigations of 0.25-0.50pp.
Renaissance also said that it believed the National Bank of Georgia considered the value of the dollar to be at a stable exchange rate to the Georgian lari (GEL) at GEL3.00-3.05.
The budget committee of the Georgian parliament has said it expects the economy to shrink by 10.7% y/y in the second quarter, according to Business Media.
Georgia’s GDP increased by 1.5% y/y in Q1, but then shrunk by 2.7% y/y in March, according to a flash estimate of statistics office Geostat.
The country’s central bank has said that following declines in domestic and
11 GEORGIA Country Report July 2020 www.intellinews.com
