World Bank: Georgia’s economic growth to drop to 2.5% amid Ukraine war

The Georgian economic growth is expected to slow to 2.5 percent in 2022 due to ongoing hostilities in Ukraine, the World Bank’s Europe and Central Asia Economic Update said. 

The report from the World Bank, which had forecasted a 5.5 percent growth of the Georgian economy in 2022 in its report Global Economic Prospects 2022, noted the baseline outlook envisioned growth recovering in the country from 2023 onward due to “easing monetary policy, recovery of tourism, and the restoration of economic links.” 

The report of the Bank reads the war in Ukraine is likely to impact the Georgian economy through the following channels:

• Goods trade - both Russia and Ukraine are Georgia’s top trading partners 
• Tourism - 21 percent of visitors in 2021 were citizens of these two countries
• Remittances - Russia and Ukraine account for about 20 percent of total money transfers to Georgia 
• Increased commodity prices - disrupted commodity supplies from Russia and Ukraine due to war

The document also emphasises Georgia, Armenia, Kazakhstan and Turkey being supplied with over 75 percent of the wheat from Russia and Ukraine. 

Russia is a major supplier of agricultural inputs, accounting for over 90 percent of cereal product imports in Kazakhstan, Armenia, and Georgia, as well as automotive products, stainless steel, and batteries,” the report notes. 

Sebastian Molineus, the World Bank Regional Director for the South Caucasus, said Georgia was “well placed to manage the economic fallout of the war due to reasonable fiscal and external buffers and a credible macro-financial framework.” 

What is needed now is to continue with prudent economic management, provide support to affected businesses and households while reinvigorating the structural reforms to improve productivity, improve human capital and address consequences of climate change,” Molineus added. 

As for Armenia, its economy is forecast to grow 1.2 percent this year, and Azerbaijan's economy is projected to grow 2.7 percent in 2022.

The latest data on real Gross Domestic Product shows the Georgian economy increased by 14.6 percent in February 2022 year-on-year and by 16.3 percent in January-February 2022, the National Statistics Office of Georgia revealed.