Georgia is forecast to return to economic growth of 4.5 per cent in 2021 thanks to expected recoveries in tourism, private consumption, investment, and net exports, following a contraction this year due to the coronavirus pandemic, says a new Asian Development Bank (ADB) report, the Asian Development Outlook 2020 Update.
The ADB forecasts a five per cent contraction in economic growth in 2020 in view of the adverse effects of COVID-19 on the economy and investment climate, but a rebound in 2021. Real gross domestic product (GDP) declined by an estimated 5.8 per cent in the first half of this year against 4.8 per cent growth in the same period of 2019.
Georgia has adopted several measures to mitigate the impact of COVID-19 on the economy including easing bank regulations and tax collection, broadening social packages, a cautious reopening of businesses and the promotion of internal tourism. The recovery can be maintained by prolonging certain tax and credit concessions, stimulating private sector development, and strengthening health institutions in preparation for a possible second wave", said ADB Country Director for Georgia Shane Rosenthal.
The report forecasts inflation in Georgia will reach six per cent and 4.5 per cent in 2020 and 2021, respectively, higher than the bank’s previous estimates in its Asian Development Outlook, released in April.
The possibility of a prolonged disruption of tourism and external demand and supply chains continues to weigh on the growth forecast, as does the prospect of a slowdown in government processes following parliamentary elections in October, says the ADB.