Page 16 - GEORptFeb21

3.2 ​Macro outlook
World Bank sees robust recovery in Georgia after steeper than expected decline in 2020
The Georgian economy looked on course to shrink by 5% in 2020 while its likely growth in 2021 would be quite robust with 5% in the other direction, ​allowing for almost a complete recovery, according to the World Economic Outlook (WEO) from the International Monetary Fund (IMF). After the seventh review under the IMF Extended Financial Facility in December, the Fund revised its 2020 GDP contraction forecast to 5.1% and toned down expectations for 2021 growth to 4.3%.
The key driver behind the GDP projection remains the recovery in tourism. Galt & Taggart in a report dated December 23 expected Georgia’s economy to rebound to 5.0-5.5% growth in 2021 assuming tourism recovers to 50% of its 2019 level; without a recovery in tourism, it expects growth at around 3.7% in 2021.
Georgia looks to have ended last year with a steeper than expected contraction in growth, but will this year recover most of the ground lost and will see a higher than previously expected GDP expansion next year, according to the latest issue of the World Bank’s Global Economic Prospects. ​The World Bank has maintained its projection for Georgia’s economy, previously updated in October.
At that time, the institution revised downward its estimate for last year’s GDP growth in Georgia to minus 6%, from the minus 4.8% projected last June. After 4% growth in 2021, Georgia’s economy could gain another 6% in 2022 thus returning to pre-pandemic robust growth rates, it added.
“Growth in the South Caucasus subregion is projected to rise to 2.5% in 2021, as the shocks related to the pandemic and conflict dissipate, and as tourism recovers alongside improving consumer and business confidence,” the report said.
The World Bank also said in its latest forecasting: “If the downturn in travel [caused by the pandemic] is prolonged, growth outcomes [in 2021] could be much weaker, particularly in tourism-dependent economies. Delays in the production, procurement, or distribution of COVID-19 vaccines, lower-than-expected vaccine effectiveness, or the continuation of pandemic-related restrictions could also delay the economic recovery.”
The World Bank revised down its forecasts for global economic growth in 2021 to 4% from 4.2% as previously estimated, after a contraction of 4.3% in 2020, and warned that an increase in cases of COVID-19 infection and delays in vaccine distribution could limit this year's return to just 1.6%.
16​ GEORGIA Country Report​ February 2021 ​ ​www.intellinews.com