Page 16 - GEORptOct22

Georgian prime minister praises country’s economic growth
Georgia’s economy grew by 10.5% in 1H22
Irakli Garibashvili, Prime Minister of Georgia, said that the country had globally unprecedented economic growth, according to the seven-month data.
"Last week, the economic growth rate was published, which amounted to 10.3% in the last seven months, this is really an unprecedentedly high economic growth rate in the whole world. Due to the Russia-Ukraine War, there are immense challenges not only in Europe, as these problems are transmitted to the world as a whole. Against this background, our country manages to reach double-digit economic growth," said the prime minister before the cabinet meeting on September 5.
Mikheil Kukava, Economist at PMCG, declared that Georgia will not improve its sovereign credit rating with this pace for 2022-2023.
"If the country develops at this pace in the future, there is no improvement in the sovereign credit rating. The sovereign credit rating also assesses the country's solvency, investment and general attractiveness of the country. For example, for people to move here," said Kukava.
Georgia has its sovereign rating at the 'BB' level. "This also reflects unambitious reforms," said the economist.
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.
"This indicates how critical the peace-oriented policy that the country implements is. With peace-oriented policies, business and investment promotion policies, high economic growth will ultimately be achieved, which, of course, will affect the population's economic well-being," he said.
The World Bank projected the Georgian economy to grow 5.5% in 2022 and next year, followed by a 5% growth in 2024. 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.
3.2 Macro outlook
World Bank raises its 2022 growth forecast for Georgia to 8.8%
The World Bank has upgraded its growth forecasts for Georgia, with growth projected to reach 8.8% by the end of 2022.
Growth averaged double digits during the first half of 2022, and employment is recovering. In addition to robust domestic demand, the country has benefited from a strong influx of money transfers from Russia, as well as from the recovery of tourism. While significant risks in Georgia’s economy persist, they have become more balanced.
Key conditions and challenges
Despite a successful development record in Georgia over the past decade, structural challenges persist, such as notably weak productivity and difficulties to create high-quality jobs. Many Georgians in rural areas remain engaged in low-productivity agriculture. Human capital formation remains weak, and poor learning outcomes and skills are a problem for doing business and firm growth. Due to trade openness and reliance on income from tourism, Georgia is
16 GEORGIA Country Report October 2022 www.intellinews.com