Page 15 - GEORptJun22

Georgian GDP increased by 10.4% in 2021
The World Bank is to up its economic growth forecast for Georgia to 5.5% from 2.5% (forecast issued in April), Sebastian Molineus, the World Bank’s regional director for the South Caucasus, was cited as saying by bm.ge.
The Georgian economy was showing an “amazing resistance and firmness”, Molineus was quoted as saying.
According to the National Statistics Service of Georgia, which were published on March 21, in 2021, Georgia's real GDP grew by 10.4%.
Last year, GDP at current prices amounted to GEL60.2bn ($18.7bn), which is 22.3% higher than the corresponding figure for 2020. At the same time, in 2021, the percentage change in the GDP deflator was 10.8%.
According to the Statistics Service, growth was observed in the following sectors: arts, entertainment and leisure (43.1%); supply of electricity, gas, steam and air conditioning (33.5%); accommodation activities and food delivery (29.8%); health and social activities (28.7%); transport and warehousing (27.6%); information and communication (23.9%); financial and insurance activities (23.5%); repair of cars and motorcycles (19.9%); mining industry (13.5%); real estate transactions (9.2%); processing industry (9%).
Decline was observed in the following sectors: construction (-21.8%); education (-2.3%); agriculture, forestry and fisheries (-1.4%); mandatory social security (-0.9%).
3.2 Macro outlook
World Bank knocks 3pp off Georgia’s expected GDP growth with new forecast of 2.5%
The World Bank cut its 2022 growth forecast for Georgia to 2.5% from the 5.5% it projected pre-Ukraine war, while cautioning that there is considerable scope for further downgrades if the war continues for much longer.
In its outlook for Georgia released as part of a spring economic update, the World Bank said: “The war in Ukraine is likely to impact the Georgian economy adversely through several channels. The first channel is goods trade. Both Russia and Ukraine are among Georgia’s top 10 trading partners and a key destination for exports, including wine and beverages.
“There is limited potential to divert some of the affected exports to alternative markets in the short term. In addition, Georgia is reliant on Ukraine and Russia for key imports such as cereals. The second key channel is tourism. The expected dramatic drop in the arrival of Russian and Ukrainian tourists, who together accounted for 21 percent of visitors in 2021, will put further strain on a sector that is still reeling from the COVID-19 pandemic. The third channel is remittances, with Russia and Ukraine accounting for over 20 percent of total remittances. Those are at risk of declining sharply because of economic contraction in the host countries, depreciation of the ruble, and challenges in conducting payment transfers from Russia.”
Lastly, said the international financial institution (IFI), elevated commodity prices would also affect Georgia. “Oil and food prices have increased sharply since the beginning of the war due to uncertainty and disrupted commodity supplies from Russia and Ukraine. These impacts will cause a slowdown in growth, higher inflation, and widening external balances,” observed the World
15 GEORGIA Country Report June 2022 www.intellinews.com