Page 13 - GEORptMay18

The support will be disbursed in two tranches and is contingent upon Georgia's performance in the areas of democracy, rule of law, human rights, and good governance, the statement concluded.
3.2 Macro outlook
IMF economic outlook for South Caucasus: Azerbaijan’s growth prospects revised up to 2%
South Caucasus to post strong growth in 2018, ADB says in latest report
The International Monetary Fund (IMF) has revised its growth projection for Azerbaijan in 2018 up from 1.3% to 2% in its latest economic outlook published on April 17. The development is part of a wider trend of better than previously expected economic performance across the South Caucasus, Central Asia and Russia.
The oil and gas-dependent Azerbaijani economy has begun to recover after its 3.8% y/y contraction in 2016, prompted by low oil and gas prices. In 2017, the economy expanded by a modest 0.1% y/y, but growth is expected to accelerate to 3.9% y/y in 2019, when a new gas exploration and export project comes on line. In the first quarter of 2018, the economy grew by 2.3% y/y, according to data released by the country's national statistics agency on April 17.
Concurrently, Azerbaijan's consumer price inflation is projected to come down from 13% in 2017 to 7% in 2018 and 6% in 2019, according to the IMF. The Azerbaijani currency took a hit amidst the oil and gas recession, as the central bank dropped its peg to the dollar in 2015, which brought about a dramatic, 50% depreciation of the currency and double-digit inflation.
Meanwhile, the Georgian economy is expected to stay the course, with GDP growth projected at 4.5% in 2018 and 4.8% in 2019, following a 4.8% growth rate in 2017. Georgia has proven to have the most resilient economy in recent years out of the three countries in the South Caucasus, as the small country has moved to diversify its commercial partners and economy, has forged several free trade agreements, and has successfully attracted foreign and domestic investment in real estate, renewable energy, financial services, hospitality, and infrastructure projects.
Lastly, Armenia's growth prospects are a modest 3.4% for 2018 and 3.5% in 2019 according to the IMF, which is too little to improve living standards in a lower-middle income country where a third of the population lives in poverty. Furthermore, the IMF expects that the unemployment rate, which officially stands at 18.9% but is believed to be much higher, will remain flat in the next three years.
The three countries that make up the South Caucasus are expected to perform relatively well economically, according to the Asian Development Bank (ADB)'s latest economic outlook published on April 11.
Armenia
The Armenian economy is projected to grow by 4% in 2018 and 4.2% in 2019 on the back of strong growth in industry and services. ADB cites the Armenian government's official GDP growth rate in 2017, 7.5%, (many observers, including ratings agencies, doubt that the figure was actually as high), noting that a strong recovery in consumption and industry supported high levels of economic growth. Construction, however, only grew by 3.1% y/y
13 GEORGIA Country Report May 2018 www.intellinews.com