Posted: 4 years ago

EBRD Forecasts Georgia's GDP Growth of 4.5% this Year

EBRD has issued a new forecast for Georgia's GDP growth. The bank forecasts a 4.5% increase in Georgia's economic output in 2019.

"Economic output expanded by 4.7 percent in 2018, driven largely by growth in trade, real estate, transport and financial intermediation. The hospitality sector continued to boom, supporting overall economic performance; 

the share of tourism-related services in the whole economy increased from an average of 7.3 percent in 2015-17 to 8.1 percent in 2018. However, the output of the construction sector declined by 3.1 percent, marking the first contraction in the sector since 2013. 

Supported by a growing network of free trade agreements, exports of goods increased by 22.6 percent in 2018 and by 13.2 percent in the first two months of 2019, both in nominal US dollar terms.

In 2018, inflows of remittances increased by 13.1 percent, amounting to 10.9 percent of GDP and supporting household consumption. Combined with thriving tourism and rising exports of goods, this caused a narrowing of the current account deficit to 7.7 percent of GDP in 2018. 

At the same time, foreign investment into Georgia decreased by 34.9 percent compared to 2017, hitting a five-year low at 7.3 percent of GDP. This came on the back of the completion of the South Caucasus Pipeline Expansion (SCPX – the gas pipeline connecting Azerbaijan and Turkey), the transfer of several enterprises to domestic ownership and debt repayments between connected companies. 

Despite the decline, FDI remained the main source of currency inflows, nearly offsetting the current account deficit. Balance of payments dynamics supported the currency which, while subject to seasonal variations, remained resilient to negative developments in regional economies. High-frequency indicators point to the economic growth of 4.1 percent year-on-year in the first two months of 2019. We forecast Georgia’s real GDP to grow by 4.5 percent in 2019 and by the same rate in 2020,"- is noted in EBRD statement.