Page 14 - GEORptDec19

The IFIs have cut their projections for Georgia’s economy after taking into consideration two major drivers: the Russian sanctions (a ban on flights has put pressure on tourism and industries on the same horizontal) and monetary policy tightening pursued by the central bank to curb inflation partly generated by expectations for a weakening of the Georgian lari. The former factor might be removed sooner than expected, however, while the latter depends to a large extent on rhetoric and expectations.
On the upside, gradual currency weakening since last year has already resulted in a better external balance. But the lagged effects of the monetary tightening will be seen later next year.
A third major driver for Georgia’s economy is the volatile regional economic context. The World Bank has cut its forecast for the advance of the Georgian economy in 2019, while the Asian Development Bank (ADB) has cut its 2019 growth outlook for Georgia to 4.7% from 5.0%. The reductions were attributed to the country’s modest outlook for private investment growth.
3.2 ​Macro outlook
EBRD maintains robust 4.5% growth forecast for Georgia
Georgia’s economy will grow at a rate of 4.5% this year as well as in 2020, the European Bank for Reconstruction and Development (EBRD) has projected in its latest Regional Economic Prospects report issued on November 6, maintaining its previous forecast published in May.
Georgia’s economy has advanced at rates of 4.7%-4.8% over the past three years, but the slowdown projected by the EBRD is moderate in the regional context. Economic growth in the Eastern Europe and Caucasus (EEC) region is projected by the development bank to stabilise at 2.9% in both 2019 and 2020.
The forecast is between the slightly more pessimistic view expressed by the World Bank (4.4% growth this year followed by 4.3% in 2020) and the slightly more optimistic one issued by the Asian Development Bank (4.7% followed by 4.6%).
Inflows of money transfers into Georgia are growing for the fourth consecutive
14​ GEORGIA Country Report​ December 2019 ​ ​www.intellinews.com