Page 15 - GEORptOct20

World Bank sees Georgia’s GDP contracting 4.8% this year on sluggish tourism
Georgia's economy is set to shrink by 4.8% in 2020 versus a total decline in the South Caucasus region of 3.1%, the World Bank said late on June 8 as it released its updated Global Economic Prospects report.
Georgia’s very high exposure to tourism means it will take a severe hit from the effects of the coronavirus (COVID-19) pandemic, the report noted. Prior to the virus emergency, the World Bank in January estimated that Georgia would see 2020 growth of 4.3%.
The country can at least look forward to an economic bounceback in 2021 when, if the World Bank is correct, growth of 4.0% will be recorded. That would be only 0.5pp less than what the international financial institution foresaw six months ago.
Georgia’s government has forecast a GDP decline of 4% this year, while the European Bank for Reconstruction and Development (EBRD) has predicted a drop of 5.1%.
"Growth in the South Caucasus is projected to decelerate to -3.1% this year as the subregion faces growth headwinds from the COVID-19 pandemic and, subsequently, low commodity prices,” the World Bank report stated.
However, it added, the region’s economy would strengthen by 3% in 2021 “as the impact of shocks related to the COVID-19 pandemic dissipates and tourism recovers alongside improving consumer and business confidence in Armenia and Georgia”.
The direct and indirect contribution of tourism to Georgia’s GDP is estimated by the World Bank at around 26%, of which 14pp is indirect. In the Europe and Central Asia (ECA) region, only Montenegro (where tourism’s total GDP share is 32%) is more exposed to a decline in tourism.
The report also pointed to fiscal measures to battle effects of the pandemic announced by Georgia, equivalent to 3% of GDP over the next few years. They include additional health care spending, support for tourism, accelerated and increased VAT refunds, low-income tax for the low-income population and aid for the poor.
4.0​ Real Economy 4.1​ Industrial production
Industrial activities to restart and various shops to open in Georgia on May 11
All kinds of production activities will be resumed in Georgia from May 11, Prime Minister Giorgi Gakharia said on May 7, announcing a government decision on lifting coronavirus (COVID-19) restrictions.
Gakharia added that all shops, except for clothing and shoe stores, would be permitted to open from the announced date.
"From May 11, we will reopen all kinds of production. In addition, we will open all kinds of retail and wholesale stores that have outdoor entrances and do not sell clothes and shoes,” he said, adding that the reopening did not apply to malls.
15​ GEORGIA Country Report ​October 2020 ​ ​www.intellinews.com