Page 5 - GEORptNov20
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1.0 Executive summary
Georgia, which largely managed to escape the first wave of the pandemic, has now been reporting high numbers of new cases. Georgia, despite its small population of around 4mn, announced nearly 2,000 coronavirus cases in a 24-hour period spanning October 24-25, including more than 1,000 cases in the capital city Tbilisi that has emerged as a major virus hotspot. The Black Sea region of Adjara played a key role in spreading the virus during the summer months because of its holiday resorts.
On October 20, 1,186 new cases were detected in Georgia, bringing the country’s total number of infections to date to 19,857. Most new cases (425) were detected in Tbilisi, followed by Imereti (372). Daily infection totals were in the dozens until early September, while the Georgian death rate never exceeded more than one patient per day from the outset of the pandemic.
Georgia faces a sharp plunge in international tourism revenues and subdued external demand. Across August and September, Georgia's tourism revenue shrunk by $700mn compared to the same period of last year. The central bank attempted to maintain balance in the foreign exchange market by selling FX from reserves it built up to be robust, but it is hard to offset such a deep drop in inflows.
Georgia’s GDP declined by 5.3% y/y in August, following the 5.5% y/y contraction seen in July and the double-digit plunge seen in Q2, according to estimates issued by statistics office Geostat. The country’s economy thus posted a modest 2.2% y/y advance in Q1 but suffered a 5.8% y/y contraction in H1.
The International Monetary Fund (IMF) is expecting a 5% contraction in Georgia's economic output this year while its growth in 2021 will be quite robust with 5% in the other direction, allowing for almost a complete recovery, according to its updated World Economic Outlook (WEO) released in October.
The European Bank for Reconstruction and Development (EBRD) on October 1 predicts Georgia’s economy will contract by 5% this year given the impact of the coronavirus (COVID-19) pandemic on its tourism industry. The country’s economy will return to the level of 2019 in the second quarter of 2022, under the development bank’s revised scenario.
Meanwhile, the Asian Development Bank (ADB) in its mid-September update sees Georgia’s GDP to remain unchanged with a 5% GDP reversal expected. The ADB on October 29 approved a $200mn policy-based loan to help restore parts of Georgia's economy impacted by the coronavirus (COVID-19) crisis by addressing challenges in the country's public finance management and social security systems.
The IMF said that Georgia’s current account gap would double to 10% of GDP this year amid weak tourism revenues—since then the recovery outlook for the sector has deteriorated. Developments have put further pressure on the public deficit, seen in April by the IMF as heading for 8.5% of GDP.
5 GEORGIA Country Report November 2020 www.intellinews.com
