Page 21 - Small Stans and Causcasus Outlook 2022

Georgia now has the highest monetary policy interest rate in 13 years,
forced by the headline inflation that remained in November above 12%
y/y for the fourth month in a row.

2.1.4 Industrial production
Georgia’s fragile manufacturing sector has already recovered after the
slowdown seen in 2020. But its performance was rather dull over the
previous five years until the COVID-19 crisis and there are no grounds
to expect outstanding performances post-crisis unless significant
investments (hopefully driven by foreign investors) are done,
particularly with a view to diversification (in terms of industrial sectors).
This would also help the external balance by import substitution.

Manufacturing output in Georgia rose by 12.8% in January - September
2021 compared to the same period of 2020, and it is likely to maintain a
robust growth rate in the full year, thus reversing in full year 2021 the
6.1% contraction seen in 2020.However, the industrial activity in the
country is growing at a very slow pace over the medium term and this is
unlikely to change post-crisis.

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