IMF revises 2021 growth outlook, expects Georgian economy to rebound to 4.3%
Covid-19 shock is expected to cause a contraction of five per cent in GDP in 2020, 'one percentage point greater than projected at the time of the sixth review, on account of a more negative impact of the lockdown and a more protracted shock', says the IMF. Photo: Nino Alavidze/Agenda.ge.
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The International Monetary Fund (IMF) expects gross domestic product growth to rebound to 4.3 per cent in 2021 'as the effects of the pandemic fade, but considerable downside risks remain', says the IMF staff team led by Mercedes Vera Martin who conducted virtual discussions from October 5 to November 9, 2020, on the seventh review under the Extended Fund Facility (EFF) arrangement.
The revision in the 2021 growth outlook, from five per cent at the October 2020 World Economic Outlook, is attributed to uncertainty associated with the regional conflict and the increased number of Covid-19 cases in Georgia. Inflation is expected to converge to the 3-percent target by end- 2021. Medium-term growth is projected to remain unchanged at 5¼ percent supported by infrastructure spending and sustained structural reforms to increase productivity and enhance private sector-led growth", reads the statement issued by Vera-Martin after the conclusion of the mission.
Completion of the review will make about $112.1 million available to Georgia, bringing total disbursements under the EFF arrangement to about $576.4 million.
Here are the key projections of the IMF staff team for Georgia:
- Covid-19 shock is expected to cause a contraction of five per cent in GDP in 2020, 'one percentage point greater than projected at the time of the sixth review, on account of a more negative impact of the lockdown and a more protracted shock'
- End-2020 inflation is projected at 3.5 per cent 'as high food prices during the lockdown have been fully offset by the decline in inflation after the reopening'
- The current account deficit is expected to widen to 9.7 per cent of GDP in 2020, from 5.4 per cent in 2019
- The fiscal deficit is expected to widen on the back of lower tax revenues and fiscal support measures provided to support those impacted by the shock
- The shock to tourism is expected to be protracted with tourism receipts assumed to recover to 2019 levels only by 2024
The statement reads that the National Bank of Georgia (NBG) 'has taken decisive actions' to mitigate the impact of the pandemic on the real economy and the financial sector. Banks in Georgia have been 'generally resilient' amid the pandemic, helped by their sound initial capital and liquidity positions and the strong response by the NBG in dealing with the shock.
Despite lower revenues, the government expanded spending to minimise the economic and social impact of the crisis. Among the measures, wage subsidies, cash transfers to households, including those in the informal sector, expanded social transfers, and temporary tax reliefs for businesses have helped sustain activity. Smoother execution of the budget helped accelerate public investment and VAT refunds. As a result, the fiscal deficit is projected to reach 8.7 percent of GDP in 2020", says Vera-Martin in her statement.
In conclusion, the statement reads that advancing the structural reform agenda 'remains essential' to support the recovery, limit the economic scarring from the pandemic, and achieve stronger, resilient, and more inclusive growth, needed to improve the standards of living for all Georgians.
The International Monetary Fund (IMF) has upgraded its World Economic Outlook which now says that the Georgian economy will grow five per cent in 2021 and the average growth rate will be 5.5 per cent in 2021-2025. The IMF says that the nominal GDP per capita in terms of purchasing power parity will exceed $20,000 for the first time in 2024 in Georgia, and $21,000 by 2025.
The Georgian economy is gradually returning to a positive development track, says Georgian Economy Minister Natia Turnava, citing the recent statistics of the external trade of Georgia which shows that in September 2020 the exports of Georgia increased 8.6 per cent compared to the same month of last year.
The Georgian economy is projected to contract by six per cent in 2020, while in 2021 economic growth is forecast to reach four per cent, says the latest edition of the World Bank’s Economic Update for the region, released today.
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 real growth of gross domestic product (GDP) in Georgia amounted to 5 per cent in 2019, says the final results of the National Statistics Office of Georgia, noting that GDP at current prices amounted to 49.25 billion GEL ($14.95 bln/€12.64 bln) which is a 10.4 per cent increase year-on-year.
The World Bank’s data show that Georgian GDP will have decreased by six per cent in 2020, whereas the bank forecasts the Georgian economy to grow by four per cent in 2021 and by six per cent in 2022.
The executive board of the International Monetary Fund (IMF) has just completed the eighth review of Georgia’s economic reform programme supported by a four-year extended arrangement under the Extended Fund Facility (EFF ).
Georgian Deputy Finance Minister Mikheil Dundua says that according to the economic growth forecast of the International Monetary Fund the Georgian economy will grow by 34.5% in 2021-2026 and with this rate Georgia ranks first in Europe.
Georgian Prime Minister Irakli Garibashvili has discussed the Covid-19 situation with the area mission chief of the International Monetary Fund James John during an online meeting earlier today.