Page 4 - GEORptAug22

1.0 Executive summary
The Georgian economy grew by 7.2% in Q2 and 10.5% in the first half of 2022 y/y, according to the latest National Statistics Office of Georgia data. Deputy Minister of Finance Mikheil Dundua said that Georgia achieved double-digit economic growth in the conditions of a global crisis.
The World Bank in its June issue of ‘Global Economic Prospects’ has revised its GDP growth forecast for Georgia for 2022 upwards from 2.5% to 5.5%. The Georgian economy has shown resilience to the economic shock induced by the Russian invasion of Ukraine so far, driven by the strength of the services sector, particularly in tourism, with a strong recovery in the year through May.
The International Monetary Fund (IMF) previously said that Georgia’s spillovers from the war and sanctions are expected to lower Georgia’s growth to around 3% in 2022, raise inflation, and widen the current account deficit. The outlook is subject to a higher-than-usual level of uncertainty. Georgia’s economy has proven resilient in the past, and with the support of policies under the authorities’ programme. IMF expects growth to pick up in 2023 and other key indicators to strengthen as well.
Georgian Prime Minister Irakli Garibashvili tried to put a brave face on Georgia's failure to secure EU candidate status from Brussels, saying that the country would work towards being given the status. Georgia was not granted candidate status at the European Council at the June 23-24 summit - while allowing Ukraine and Moldova to go forward - because of the country’s democratic deficits. The European Commission said Georgia must first fulfill a number of conditions only after which can it receive candidate status. Since the country is struggling with the deadline, a review has been postponed. Protesters have been demanding the resignation of Prime Minister Irakli Gharibashvili for months.
In trade related news, the Georgian government will ban the export of wheat and barley for a year starting from July 4, 2022. The reason is to ensure food security on the domestic market given the Russian invasion of Ukraine, according to Minister of Environment and Agriculture Otar Shamugia.
The Trans-Caspian International Transport Route (TITR) is gaining importance as trade through its member states is growing amid the necessity for more trade route volume that bypasses heavily sanctioned Russia.
Georgia exported $439mn of goods in June, marking a y/y 25% increase compared to the same time in 2021, according to Geostat. Imports grew by 21% y/y and reached $1.05bn in June. The trade deficit consequently widened by 19% y/y to $609mn in the month.
Higher commodity prices have pushed up Georgia’s imports as well. The robust local currency, which is slightly strengthening versus the US dollar, is conducive to local demand and apparently hasn’t impacted the main categories of exports.
Foreign direct investment in Georgia in the first quarter of 2022
4 GEORGIA Country Report August 2022 www.intellinews.com