Page 16 - GEORptOct19

World Bank cuts Georgia 2019 GDP growth outlook by 0.4pp to 4.6%
“Prices rose by 5.2% for food, 2.9% for other goods, and 1.9% for services. Average inflation in the 12 months to June reached 3.0%.”
Georgia’s central bank, having reduced its refinancing rate by half a percentage point to 6.5% in March, raised it back to 7.0% in early September to moderate inflationary pressure.
With the Georgian lari depreciating and triggering further price increases, the update significantly raised the inflation forecasts for 2019 and 2020.
It added: “The current account deficit narrowed to the equivalent of 6.2% of GDP in the first quarter of 2019, as higher reexports drove merchandize export growth by 12.8%, and as imports fell by 4.7% with the winding down of energy investment projects.
“A surplus in service trade equalled 10.1% of GDP in the first quarter of the year. With merchandise exports expected to remain robust, this Update projects narrower current account deficits than those published in [the previous forecast from the ADB].”
The World Bank has revised downward its outlook for Georgia's GDP growth in 2019 and 2020 by 0.4pp and 0.2pp, respectively, but the revised scenario still shows the country’s economy expanding by 4.6% this year and 4.8% next year, compared to last year’s 4.7%. ​Growth will further strengthen to 5% in 2021, if the forecasting proves correct.
The latest World Bank calculations are given in its twice-yearly​ ​Global Economic Prospects report ​released late on May 4.
Georgia is already outperforming its region for growth, but the differential is likely to narrow in coming years as peers catch up on the back of continued implementation of domestic reforms and infrastructure investment. Growth in the South Caucasus subregion is projected by the World Bank to strengthen to 4.2% by 2021, from 2.6% in 2018.
The World Bank also observed in its report: “Robust services sector activity continues to underpin growth in the South Caucasus, with an additional boost coming from manufacturing in Armenia.”
The European Bank for Reconstruction and Development (EBRD) stuck to its forecast of economic growth in Georgia of 4.5% in 2019 in its latest economic outlook released in May.​ The expansion would be a slight decline on the 4.7% recorded in 2018 and 4.8% registered in 2017, the development bank added, observing that the “the Georgian economy remains on the path of strong economic growth”.
16​ GEORGIA Country Report​ October 2019 ​ ​www.intellinews.com