Page 15 - GEORptJun20

Georgia’s economy shrinks 2.7% in March
Georgia announces $1.1bn anti-crisis package
expected GDP plunge in Q2 would be caused by the sudden decline of domestic demand—driven by the coronavirus (COVID-19) pandemic—which would have a negative effect of 14.8pp in the GDP dynamics, while net exports would contribute a positive 4.1pp, due to imports contracting more than exports.
The volume of private consumption was expected to decrease especially in non-food products and services, the committee reasoned.
Private investment would be sharply reduced, which, despite the government's investment activities, would significantly reduce total investment and the negative pace of economic activity.
"As a result of quantitative estimates of [assumptions] the volume of imports is expected to decrease more than exports and the net export component will determine the change in economic activity by + 4.1pp, while domestic demand (for consumption and investment ) will decrease significantly (especially due to declining private investment),” the budget office stated.
The Georgian economy shrunk 2.7% y/y in March, according to preliminary data from the National Statistics Office of Georgia (Geostat). In the whole of Q1, GDP edged up by 1.5% y/y, the data also indicated.
For the third month, estimated real growth compared to the same period of the previous year was posted for construction and the information and communication sector, while decreases were registered for accommodation and food service activities, transportation and storage, entertainment and recreation, wholesale and retail trade, financial and insurance activities, utilities, manufacturing and real estate activities.
Georgia's central bank said that following declines in domestic and external demand, Georgia's real economic output would contract by around 4% this year.
Georgian Prime Minister Giorgi Gakharia on April 24 unveiled a Georgian lari (GEL) 3.5bn ($1.1bn, equivalent to 7% of GDP) anti-crisis plan to mitigate the economic and social effects of the coronavirus (COVID-19) outbreak.
"For now, the country will spend GEL3.5bn on managing the crisis, of which GEL1.035bn will be directed at social support of citizens, GEL2.11bn will be directed at the economy and entrepreneurs, while GEL350mn will be spent on the health care of all citizens," Gakharia said.
Almost all the opposition parties have sharply criticized the government’s anti-crisis plan, claiming that it is insufficient.
In his public speech, Gakharia stressed the social dimension of the plan, but the details related to the GEL2.11bn earmarked for the economy and business remained rather scarce. Furthermore, a significant part of this budget, namely GEL1.1bn, is made up of loans extended by the government to banks for boosting lending and therefore cannot be counted as “public spending”.
The country’s GDP will contract by 4% this year, the government has assumed. Gakharia said that budget revenues will likely drop by GEL1.8bn ($563mn) and the government’s expenditures will decrease by GEL300mn ($94mn) due to events and business trips that cannot be held.
15​ GEORGIA Country Report ​June 2020 ​ ​www.intellinews.com