Page 6 - GEORptMay20

Georgian Prime Minister Giorgi Gakharia on April 24 unveiled a Georgian lari (GEL) 3.5bn ($1.1bn, equivalent to 7% of GDP) anti-crisis plan to mitigate the economic and social effects of the coronavirus (COVID-19) outbreak. ​The 7%-of-GDP plan entails a social assistance package for individuals, as well as a fiscal stimulus in the form of tax relief and exemptions for businesses over the course of the following six months.
Georgian think tank PMC Georgia Research has estimated in ​a report​ that the country’s GDP will drop by 8% this year under a baseline (“least pessimistic”) scenario, while it would plunge by 12.9% under the “pessimistic” scenario. Weaker tourism and remittances are two drivers hitting the country’s economy. ​In March, compared to March 2019, the number of tourists coming to Georgia decreased by 56.1%, while remittance inflows dropped by 9%. Further declines in these figures are expected in the coming months.
The government, in line with the International Monetary Fund (IMF), projected a 4% GDP decline this year,​ which corresponds to the “optimistic” scenario drafted by PMC Research.
Georgia’s central bank (NBG) on April 29 cut the refinancing rate by 0.50 percentage points to 8.5%, ​mentioning local and global demand-side disinflationary pressures as well as lower oil prices​. ​Annual inflation in Georgia in March stood at 6.1%. ​The NBG predicts that due to temporary factors, inflation will remain high for several months, then gradually decline, and in the first half of 2021 approach the 3% target level.
Preliminary data shows that in March exports of goods fell by 22% y/y and revenues from international travelers declined by almost 70% y/y.
There was also a decrease in remittances (-9% y/y). At the same time, imports declined 13% y/y, indicating a weakening in domestic demand.
6​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com