Page 15 - GEOGRptJun19

ADB projects 5% GDP growth in Georgia
IMF expects Georgia’s GDP growth to clock 4.6% in 2019
Supported by a growing network of free trade agreements, exports of Georgian goods increased by 22.6% in 2018 and by 13.2% in the first two months of 2019, both in nominal US dollar terms, the EBRD said.
It added: “In 2018, inflows of remittances increased by 13.1 per cent, amounting to 10.9 per cent of GDP and supporting household consumption. Combined with thriving tourism and rising exports of goods, this caused a narrowing of the current account deficit to 7.7 per cent of GDP in 2018. At the same time, foreign investment into Georgia decreased by 34.9 per cent compared to 2017, hitting a five-year low at 7.3 per cent of GDP.”
This decline came on the back of the completion of the South Caucasus Pipeline Expansion (SCPX – the gas pipeline connecting Azerbaijan and Turkey), the transfer of several enterprises to domestic ownership and debt repayments between connected companies the EBRD noted.
“Despite the decline, FDI remained the main source of currency inflows, nearly offsetting the current account deficit,” it added. “Balance of payments dynamics supported the currency which, while subject to seasonal variations, remained resilient to negative developments in regional economies.”
The Asian Development Bank (ADB) has projected economic growth in Georgia will be recorded at 5% this year and 4.9% in 2020. Its forecasts are given in its newly issued Asian Development Outlook (ADO) 2019 report .
Georgia’s economy expanded by 5% in 2017. The government also expects 5% this year, as a minimum. The International Monetary Fund (IMF) projects 4.6%, with infrastructure spending expected to compensate for weaker external demand and slower credit growth.
The ADO determines that the development of workforce skills will help Georgia strengthen its business environment and infrastructure construction. These factors, it says, will in turn contribute to attracting investments in high-revenue sectors.
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.
15 GEORGIA Country Report June 2019 www.intellinews.com