The real gross domestic product (GDP) will decline in 2020 in Georgia and is estimated to be -4.8 per cent, with projected recovery of growth at 4 per cent in 2021, reads the World Bank’s recent report Global Economic Prospects 2020.
The report also cites Georgia’s announced fiscal measures that are equivalent to 3 per cent of GDP over the next few years, which include additional health spending, support for the tourism sector, accelerated and increased VAT refunds, a moratorium on tax payments for low-income earners, subsidised utility costs of the poor, and unemployment subsidies.
Overall, the Global Economic Prospects 2020 reads that growth in the South Caucasus is projected to shrink to -3.1 per cent this year as the subregion faces growth headwinds from the COVID-19 pandemic and, subsequently, low commodity prices.
However, activity is projected to pick up to 3 per cent in 2021, as the impact of shocks related to the COVID-19 pandemic dissipates and tourism recovers alongside improving consumer and business confidence in Armenia and Georgia. Activity is expected to firm in Azerbaijan in 2021 as oil prices stabilise, but the overall recovery will be muted by lingering structural rigidities", reads the report.
The World Bank reports says that tourist arrivals have collapsed in Europe and Central Asia, but the impacts may be felt most strongly in countries such as Georgia, where tourism accounts for a sizable share of GDP.