Page 14 - GEORptJul19

IMF expects Georgia’s GDP growth to clock 4.6% in 2019
Georgia’s central bank baseline scenario sees 5% GDP growth across 2019-2021
Export and consumption will also contribute to higher economic growth this year, the ADO concludes. In 2019, growth will be notably driven by the financial sector with respect to retail and wholesale trade, while high investments will speed up the growth of agriculture to 2.8%, it adds.
The International Monetary Fund (IMF) has issued a broadly optimistic forecast for Georgia’s economy, foreseeing 4.6% GDP growth in 2019.
Its conclusions came following talks in Tbilisi on recent economic and financial developments and progress with structural reforms. The Fund will return to Georgia for an April-May fourth review of the IMF programme being undertaken in the country.
The growth expected for 2019 is only marginally behind last year’s 4.7% advance. It should arise substantially because of significant infrastructure investment that will compensate for weaker external demand and slower credit growth, the Fund said.
Georgia’s current account deficit is projected to stabilise at around 8% of GDP (no change from 2018, but down from 8.5% of GDP in 2017), owing to still-robust growth in exports and remittances.
Risks to the outlook were mainly on the downside, including weaker growth among trade partners, global trade tensions and a sharper-than-projected credit slowdown.
The IMF commended the authorities for advancing structural reforms and stressed the need for continued efforts to promote inclusive growth and higher economic resilience to external shocks. The authorities have introduced measures to limit household indebtedness and revised the fiscal rule. They are also progressing toward a new insolvency law, a more automated VAT refund system, and a strengthened banking resolution framework.
Georgia’s GDP will rise by 5% per annum during 2019-2021, under a baseline scenario published by its central bank.
Headline inflation will hover around 3% p.a. under the baseline scenario (2.9% in 2019), allowing the regulator to ease its policy rate by 0.5pp in 2019 and 2020 and by 0.25pp in 2021. The nominal Georgian lari exchange rate versus the US dollar will remain steady, resulting in the currency strengthening in real terms.
Under a scenario with a negative external shock formulated by the central bank, Georgian GDP would only rise by 2% in 2019, 2.5% in 2020 and 3.5% in 2021. Under a compiled strong demand scenario, the growth rate would accelerate to 6% in 2019 and gradually ease to 5% in 2021 .
14 GEORGIA Country Report July 2019 www.intellinews.com