Page 15 - GEORptSep20

this year on sluggish tourism
ADB lowers 2020 GDP forecasts for South Caucasus countries
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.
The Asian Development Bank (ADB) has lowered its 2020 economic forecasts for the three South Caucasus countries, citing the impact of the coronavirus (COVID-19).
Georgia’s GDP was expected by the development bank to contract by 5% in 2020, down from the 4.9% growth that it forecast last September and the 0% it anticipated in April this year. Next year, Georgia could expect around 5%, the ADB said in its outlook report published on June 18.
Georgian inflation was projected to slow to 5% in 2020 and 3.5% in 2021, compared to the central bank’s 3% target, the ADB added.
For Armenia, the ADB now forecasts an economic contraction of 3.5% in 2020 before an expansion of 3.5% in 2021. In April, it foresaw growth shrinking 2.2% in 2020.
Armenian inflation was forecast at 1.2% in 2020, rising to 2.5% next year. GDP in Azerbaijan was now expected to contract by 0.1% in 2020, partly on lower oil prices, said the ADB. Last September it predicted Azerbaijani growth of 2.4% in 2020, while in April it gave an anticipated figure of 0.5%.
15​ GEORGIA Country Report ​September 2020 ​ ​www.intellinews.com