Page 37 - GEORptAug19

costs of servicing debt due to dollarisation. In the medium term, alongside with the elimination of one-off factors, aggregate demand is expected to increase to the potential level of output, ensuring the inflation rate is maintained close to the target.
As regards the growth outlook, the central bank expects a temporary slowdown in the second part of the year.
“Despite the risks stemming from a softening of economic growth in the second half of the last year, the baseline scenario expects that the slowdown will only be temporary. This view is based on the assumption that the moderate growth of credit activity will continue, and that fiscal stimulus will be of the planned scale,” the central bank said.
According to the current forecast, net exports, consumption and investments will all positively contribute to real GDP growth – again, supported by capital spending of the government and moderate growth in loans, according to the baseline projection.
Recent estimates show that the deviation of aggregate demand from the potential level of output deteriorated somewhat in the second half of 2018, but it is expected that moderately high economic growth will continue and that the output gap will close within the next two years.
37 GEORGIA Country Report August 2019 www.intellinews.com