Page 12 - GEORptJul20

Flash estimates shows Georgia’s GDP shrinks 16.6% in April
external demand, Georgia's real economic output would contract by around 4% this year.
According to a document drafted by the parliament;s budget committee, the expected GDP plunge in Q2 would be caused by the sudden decline of domestic demand—driven by the coronavirus (COVID-19) pandemic—which would have a negative effect of 14.8pp in the GDP dynamics, while net exports would contribute a positive 4.1pp, due to imports contracting more than exports.
The volume of private consumption was expected to decrease especially in non-food products and services, the committee reasoned.
Private investment would be sharply reduced, which, despite the government's investment activities, would significantly reduce total investment and the negative pace of economic activity.
"As a result of quantitative estimates of [assumptions] the volume of imports is expected to decrease more than exports and the net export component will determine the change in economic activity by + 4.1pp, while domestic demand (for consumption and investment ) will decrease significantly (especially due to declining private investment),” the budget office stated.
Georgia’s GDP plunged by 16.6% y/y in April, following the 2.7% y/y contraction in May, according to a flash estimate from statistics office Geostat.
Combined with the slim 1.5% y/y advance posted in Q1, the April figure produces a 3.6% overall GDP contraction for the January-April period.
In April, estimated real growth compared to the same period of the previous year was posted as negative for almost all activities. Growth was registered in mining and quarrying, however.
Particularly noteworthy were the declines in construction, trade, manufacturing, transport, hotels and restaurants, real estate operations, arts, entertainment and leisure sectors.
Geostat produces monthly rapid estimates of the real GDP growth rate using administrative data obtained on VAT taxpayers’ turnover and fiscal and monetary statistics. The turnover of VAT payers decreased by 32.8% y/y in April.
At the same time, in April, exports of goods decreased by 28%, while imports decreased by 39%, Geostat observed.
12​ GEORGIA Country Report ​July 2020 ​ ​www.intellinews.com