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$2bn. Thus, the deficit edged up by 1.7% y/y to $1.2bn in the first three months of the year.
5.1.2 Current account dynamics
IMF forecasts Georgia’s current account gap will double to 10% of GDP this year
Georgia’s GDP looks set to contract by 4% this year given the onset of the coronavirus (COVID-19) health and economic crisis before expanding by 3% in 2021, according to the l atest World Economic Outlook forecasting of the International Monetary Fund (IMF), released on April 14.
The drop in tourism activity, which is marked out as a main driver behind the anticipated economic slowdown, as well as smaller wage remittances from Georgians abroad will result in the current account deficit widening to 10.1% of GDP this year from 5.1% in 2019, the IMF added. The gap would then narrow to 6.8% of GDP in 2021 under the Fund’s scenario. The country has only just consolidated a downward trend towards smaller external deficits, including via a moderate weakening of the Georgian lari. Thinner currency inflows are likely to re-ignite pressures on the local currency.
The IMF added that it expected Georgia’s consumer price inflation to keep easing, to 4.6% this year from 4.9% in 2019, and to 3.7% in 2021.
25 GEORGIA Country Report May 2020 www.intellinews.com
