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forecast), according to a monetary policy report released by the central bank. The government already assumed 4.5% growth this year when drafting the budget planning for 2019.
The revision of the central bank's forecast was prompted by the introduction of restrictions on air travel to Georgia by the Russian Federation.
“Despite increased uncertainty, net exports are still projected to remain a significant driver of economic activity growth amid maintaining a competitive exchange rate. However, the assumptions of the forecast include the continuation of fiscal spending, particularly for infrastructure projects, and a certain pace of lending. Similar growth is expected for 2020, with the potential for real GDP to gradually slow down by the beginning of 2021,” the NBG monetary policy report said.
3.2 Macro outlook
World Bank cuts Georgia 2019 GDP growth outlook by 0.4pp to 4.6%
The World Bank has revised downward its outlook for Georgia's GDP growth in 2019 and 2020 by 0.4pp and 0.2pp, respectively, but the revised scenario still shows the country’s economy expanding by 4.6% this year and 4.8% next year, compared to last year’s 4.7%. Growth will further strengthen to 5% in 2021, if the forecasting proves correct.
The latest World Bank calculations are given in its twice-yearly Global Economic Prospects report released late on May 4.
Georgia is already outperforming its region for growth, but the differential is likely to narrow in coming years as peers catch up on the back of continued implementation of domestic reforms and infrastructure investment. Growth in the South Caucasus subregion is projected by the World Bank to strengthen to 4.2% by 2021, from 2.6% in 2018.
The World Bank also observed in its report: “Robust services sector activity continues to underpin growth in the South Caucasus, with an additional boost coming from manufacturing in Armenia.”
The European Bank for Reconstruction and Development (EBRD) stuck to its forecast of economic growth in Georgia of 4.5% in 2019 in its latest economic outlook released in May. The expansion would be a slight decline on the 4.7% recorded in 2018 and 4.8% registered in 2017, the development
15 GEORGIA Country Report August 2019 www.intellinews.com