Page 25 - GEORptSep20

CA deficit shrinks to historic low in 2019
were that the economic cost of the pandemic for all assessed countries could turn out to be worse than currently envisaged. Recovery would rely on stimulus measures proving effective in forestalling widespread company bankruptcies, limiting job losses and easing financial strains. The WEO modelled three alternative scenarios: a 2020 lockdown lasting 50% longer than it is forecasting; a mild recurrence of the virus in 2021; and a protracted pandemic and longer containment effort in 2020, as well as a recurrence in 2021. In the worst case, the global economy would shrink by around 11% rather than 3% this year, it said.
Gita Gopinath, the IMF’s economic counsellor, said the global economy was suffering a crisis “like no other”.
She added: “It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago. ‘The Great Lockdown’, as one might call it, is projected to shrink global growth dramatically.”
Georgia’s current account deficit shrunk by 25% y/y to $897mn in 2019. That accounted for 5.1% of the year’s GDP, the smallest value in absolute terms since 2005, according to data published by the country’s central bank under BPM5 methodology.
Furthermore, the CA gap remains below foreign direct investment (under BPM5, again) for the second year in a row—a robust fundamental likely to deteriorate maintaining significant pressures on the exchange rate during the coming quarters as tourism revenues and wage remittances evaporate.
Net direct investments rose 11.3% y/y to $1.05bn and gross inflows advanced by only 3.2% y/y to $1.31bn.
The CA gap widened by 24% y/y to $539mn in the fourth quarter of the year, though.
The balance of goods is the major negative element in Georgia’s current account. The deficit decreased by 9.3% to $3.73bn in 2019 but the annual decrease was more moderate (-0.5%, to $1.11bn) in Q4.
25​ GEORGIA Country Report ​September 2020 ​ ​www.intellinews.com