Page 15 - GEORptNov18

3.2 Macro outlook
IMF revises up Georgia’s economic growth outlook
ADB upgrades forecasts for Armenia, Georgia,
The International Monetary Fund in its October 9 World Economic Outlook edition revised its forecast for Georgia’s 2018 GDP growth to 5.5% from the 4.5% it projected in April. Independent projections put the country’s expected growth this year at above 6%, but caution is shown towards possible rising adverse effects stemming from the Turkish lira crisis.
Georgia's economy is currently growing at a rate slightly above its potential growth rate, fuelling external deficits but, notably, not inflation.
Looking at expected growth in Georgia in 2019, the Fund maintained its forecast at 4.8%. Similarly, its projection for the 2023 GDP growth rate - which reflects the Fund’s estimate of the country’s potential growth rate - was held at 5.2%.
The current account gap will grow to 10.5% of GDP this year from 8.9% of GDP in 2017 and will remain in the double digits at 10.2% of GDP in 2019, if the IMF estimates prove correct. Earlier in April, the Fund expected the country’s external deficit to narrow to 9.5% of GDP.
On the upside, Georgia’s inflation curve has performed above expectations. The IMF expects Georgian inflation will ease to 2.8% y/y on average this year and to 2.7% in 2019 from 6.0% y/y in 2017, following a steeper path compared to what was expected in the April edition of the Outlook.
Based on July’s data,independent think-tank ISET-PI said in September it expected annual growth in 2018 would reach 6.3%. This optimistic forecast is consistent with the evidence coming from the National Bank of Georgia and international development institutions.
The central bank revised its expectation for real GDP growth from 4.8% to 5.5% in 2018. According to its Monetary Policy Report, among the reasons behind the upward revision are improved domestic and external demand due to significant foreign capital inflows (mainly from exports, tourism and remittances), improved business sentiment, credit growth, and capital spending by the government.
The Asian Development Bank (ADB) has upgraded its 2018 growth forecasts for Armenia, Georgia and Kazakhstan in an update to its Asian Development Outlook . The upgrades followed faster than expected growth in
15 GEORGIA Country Report November 2018 www.intellinews.com