Page 14 - GEORptMar21
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 3.1 Macroeconomic overview
   Georgia’s GDP plunged 11.5% y/y in January amid lockdown
Georgia’s GDP shrinks 6.1% in 2020, decline steeper than expected
 Georgia’s GDP contracted by 11.5% y/y in January, deepening from 7.9% in December, according to a flash estimate from statistics office Geostat. The contraction is almost twice the 6.1% average GDP drop in 2020 and comes against rather strict lockdown measures taken in the first month of 2021. Positive growth rates in January were seen in only a handful of sectors: information and communication, and financial and insurance activities, Geostat commented.
Although a sharp drop in economic activity was recorded in January, TBC Capital noted that this figure is in line with expectations, as the decline reflects the high base effect of January last year, the results of the introduction of the second lockdown and the still sharply reduced revenues of tourism and related industries.
The growth rates will improve in the coming months starting February on low base effects and as the government lifted restrictions, TBC Capital noted. TBC analysts also said that due to seasonally weak activity, January GDP accounts for only 6.8% of the total year therefore the 11.5% decline will eventually not dent the full year performance too much. "Ultimately, we will leave unchanged the latest GDP forecast, which predicts a recovery of about 4% of GDP in 2021 and 7.5% in 2022," TBC Capital said in a statement.
Galt & Taggart investment bank has two scenarios for Georgia’s recovery this year, leading to 3.6% and 5% growth rates accordingly.
"We have two scenarios. One, which envisages a gradual recovery of tourism, and the second, if tourism is recovering at a slower pace than we expected. In the first case, we expect 5% economic growth, in the second case, 3.6% growth. It is noteworthy that we do not envisage additional closure of the economy in none of the two scenarios. It is very important that many restrictions have been announced and removed, the rest of the restrictions will be removed quickly and the economy will be fully operational, which will help economic growth," said G&T head of research Eva Bochorishvili.
Georgia’s economy last year contracted more than it did in 2009, the year after the country’s short war with Russia. The contraction amounted to 6.1%, according to the rapid estimate of statistics office Geostat.
The plunge was steeper than was forecast by both the government and international financial institutions (IFIs).
In the second half of January, independent university-based economic think tank ISET Policy Institute (ISET-PI) revised downwards its forecast, estimating last year's contraction at 5.5%. The think tank, however, stressed that the forecast did not take into account the coronavirus lockdown brought in for December and January.
At the beginning of this year, the World Bank maintained its projection that Georgia’s economic output would retreat by 6% in 2020. After an expected 4% bounceback in 2021, Georgia’s economy could gain another 6% in 2022, thus returning to robust pre-pandemic growth rates, the World Bank added.
GDP plunged by 7.9% in December, Geostat estimated with the figure dragging down the full-year performance to minus 6.1% y/y in
 14 GEORGIA Country Report March 2021 www.intellinews.com
 




















































































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