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Renaissance Capital sees 3-6% GDP decline in Georgia this year
enterprises in June increased for the first time in several months: some 4,309 enterprises were registered, 10.7% more than in the same period of the previous year.
Also in June, a downward year on year trend was observed in all sectors except the mining industry and utilities.
The total turnover of VAT-paying enterprises in June amounted to Georgian lari (GEL) 6.5 bn ($2.2bn), down 6.2% y/y. The contraction was much steeper in May (-22.2% y/y) and April (-32.8% y/y).
Tourism was clearly one of the sectors worst hit by the coronavirus (COVID-19) crisis, with air transport also severely hit.
The number of visits paid by international visitors in June to Georgia decreased by 95% y/y.
A steep downward trend was seen in the entertainment and leisure sector. It was associated with a decrease in the turnover of gambling and gambling-related companies by around 85%-90%.
Positive trends were observed in the mining sector, related to the extraction of non-ferrous metals ores. There were also positive trends in the water supply and waste management sectors.
The economic decline in Georgia this year will be in the range of 3%-6%, investment bank Renaissance Capital has said after assessing the impact of the coronavirus (COVID-19) crisis on the country’s economy. However, it stated that the rate of decline would depend on the size of the second wave of COVID-19 that hits the country.
As regards monetary policy, Renaissance Capital predicted that by the end of the year, Georgia’s central bank would continue to reduce its refinancing rate. Periodic currency interventions by the national lender would continue, it added. "The National Bank has reduced the refinancing rate by 0.25pp to 8.25%, which is part of a gradual program to soften the monetary policy rate,” analysts at the investment bank stated.
The central bank has emphasised that its monetary policy will remain tight in order to reduce inflationary expectations and return the inflation target to 3% in the first half of 2021.
Renaissance Capital said that there was an opportunity to continue to soften
11 GEORGIA Country Report August 2020 www.intellinews.com
