Moody's expects Georgian economy to grow by 7.3% in 2021

Moody's expects growth to be at potential of 4-5% in the next few years. Photo: Nino Alavidze/, 21 Sep 2021 - 16:49, Tbilisi,Georgia

Global ratings agency Moody's expects the Georgian economy to grow by 7.3% in 2021, following a 6.2% contraction in 2020, 'driven by the collapse of the tourism sector and the domestic impact of lockdowns and movement restrictions in the wake of the pandemic', says Moody's

The recovery is underpinned by fiscal policy support to consumption in 2021 and signs of a steady rebound in regional tourism. Remittances and non-tourism exports, such as beverages, vehicles and machinery and equipment, have also demonstrated robust growth", says Moody's.

Moody's expects growth to be at potential of 4-5% in the next few years, driven by increased investment in productivity-enhancing infrastructure in agriculture and manufacturing, further increases in exports to more diversified markets including Europe, partly reflecting additions to Georgia's free trade agreements, and as incomes continue to rise supporting consumer spending.

Moody's expects inflation to fall towards the National Bank of Georgia's (NBG) inflation target of 3% from 12.8% currently after temporary factors fade and tight monetary policy offsets commodity price and international supply constraint pressures.

The current account deficit will also begin to narrow from a peak of 12.5% of GDP in 2020 towards pre-pandemic levels of around 5%, as remittances and non-tourism exports grow solidly and the longer-term benefits of reforms are realised, including reform of the pension system to build domestic savings", said Moody's.

To note, Moody's Investors Service has affirmed the government of Georgia's Ba2 local and foreign currency long-term issuer ratings and foreign currency senior unsecured rating. The outlook remains stable.