Page 18 - GEORptMay20

Georgia’s economy growing by 4.5%.
Risks to economic growth include greater than expected sluggishness in trading partners’ economies, weaker than expected domestic demand, slower growth in tourism revenues and tighter liquidity in global financial markets, in part reflecting the impact of COVID-19.
Gains in retail trade and higher government education spending are projected to prop up the services sector to rates of 1.1% growth in 2020 and 6.3% in 2021—with hopes for a recovery in tourism reflecting in the stronger projection for 2021. The industry is seen by the ADB as contracting by 3.1% in 2020 with slowdowns in construction and manufacturing before rebounding to 2.1% in 2021 with higher mining output. Agriculture is forecast to decline marginally by 0.7% in 2020 and expand by 0.4% in 2021 as investments in the sector strengthen.
Fiscal policy is seen by the ADB as expansionary with the budget deficit projected to widen somewhat to 2.5% of GDP in both 2020 and 2021. This reflects phased increases in the basic pension and a gradual rise in education outlays to 6.0% of GDP. Public debt is expected by the bank to increase to 48.5% of GDP in 2020 and 49.5% in 2021 in part from the need to continue financing infrastructure projects.
Georgia’s external prospects will depend heavily on developments seen by its trading partners, the ADB said. The current account deficit is projected to narrow further, to 4.4% of GDP in 2020 and 4.2% in 2021, with a continued decline in imports as much lower oil prices help trim the trade deficit by 2.5% in 2020 and 0.5% in 2021. Exports are projected to grow by 3.6% in 2020 and 11.9% in 2021, with modest domestic expansion and higher foreign direct investment raising imports by 1.1% in 2020 and 7.0% in 2021.
4.0​ Real Economy 4.1​ Industrial production
Industrial production rises 12.2% y/y in 4Q19
Georgia’s industrial production increased 12.2% y/y in the fourth quarter of 2019, easing from a 16.9% y/y rise in the third quarter,​ according to the National Statistics Office of Georgia.
Production expanded at a slower pace for manufacturing ( 11.2% in 4Q19 from 20.5% in 3Q19) and water supply and sewerage production (9.6% in 4Q from 10.9% in 3Q). Meanwhile, output rose sharply for mining and quarrying production (37.8% in 4Q from 8.3% in 3Q) and electricity, gas, steam and air conditioning supply (7% in 4Q from 0.7% in 3Q).
18​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com