Page 19 - GEORptJun20

Galt & Taggart concurs with GDP decline forecast for Georgia painted by IMF for 2020 but diverges on 2021 expectation
self-employed, which represented 44% of the Georgian labour force in 2019, will be particularly vulnerable to the changes.
In the optimistic scenario, PMC Research forecast a 6.3% decrease in the total number of employed persons in Georgia, while job losses were forecast to be greater in the less pessimistic scenario (9.8%) and in the very pessimistic scenario (14.4%).
Investment bank Galt & Taggart concurs that Georgia is set for a 4% GDP decline in 2020 as projected by the International Monetary Fund (IMF), but in its latest macroeconomic update on the country’s economy it added that the anticipated 2021 recovery will be much stronger than envisaged by the Fund. ​The bank sees +5% versus the +3% envisaged under the IMF’s painted scenario.
Assessing the financial support to be provided to Tbilisi by the IMF and other international partners—such as the World Bank, EU, European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and the Asian Development Bank (ADB), G&T estimated that “stimulus in 2020 will be substantial at 11-15% of GDP, which will help to finance health and macroeconomic stabilization measures”.
The investment bank also said that the current account deficit would only measure 6% of GDP this year, as opposed to the 10.5% projected by the Fund. But in fact the Fund's expert team said that Georgia’s CA gap would hit 11.5% of GDP this year, 1pp of GDP more than envisaged by the IMF’s latest World Economic Outlook (WEO).
G&T explained that its projections were based on expectations for a significant reduction in imports, such as in oil imports given the collapse in demand. That, it said, was expected to largely compensate for tourism revenue losses in 2020. Indeed, the oil price has further collapsed since the IMF signed off on its updated WEO. That might explain part of the discrepancy between the forecasts.
G&T’s forecast is also backed by the expectation that a large part of the fiscal stimulus in nature will be current spending, such as on supporting vulnerable population groups, a tax moratorium and subsidies for companies. However, imports will be further limited due to an unwillingness to spend on big ticket and luxury goods items, such as cars, phones, home appliances and other electronic commodities. They make up almost a third of imports for Georgia.
19​ GEORGIA Country Report ​June 2020 ​ ​www.intellinews.com