National Bank’s macroeconomic scenario projects 6% growth in 2023, 5% in 2024

The National Bank of Georgia on Tuesday published its latest macroeconomic scenarios, which forecast the domestic economy to grow by six percent this year and five percent in 2024.

The scenarios, published for the purpose of the International Financial Reporting Standard IFRS 9, are intended for promoting “transparent, consistent and efficient” financial reporting in financial institutions, the NBG said.

The central bank said the main determinant of the growth was the “faster than expected” recovery of the economy's potential in the country, stimulated by increased productivity of production and investments in the current period.

In the wake of maintaining a stable macroeconomic situation in the country, the level of unemployment is gradually decreasing. In the base scenario, inflation remains below the target this year, which is largely due to the gradual decrease in the prices of energy carriers and food raw materials in the international market, the strengthening of the exchange rate, and the tightening of monetary policy”, it noted.

The institution also said local inflation had remained at a “high level” despite the “slow rate” of decline, which was mainly due to increase in prices in the service sector.

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The NBG said the country's current account deficit was expected to widen, given the deteriorating competitiveness and regional risks as a result of the strengthened national currency.

Taking into account the expected normalisation of remittance flows in the subsequent period, this creates a devaluation pressure on the national currency”, the report reads.

The Bank said an increase in cargo turnover and the transit potential of Georgia was expected to increase with the backdrop of the implemented and planned infrastructure projects between 2023-2024.