TBC Capital: Economic Decline will Slow in the Coming Months

TBC Capital has published a macroeconomic overview of the country's major macroeconomic indicators. The review says that although the epidemiological situation has deteriorated internationally, the progress made on the vaccine is significant. The vaccine is expected to be approved by the end of this year and it will gradually become widely available from the beginning of next year.

Tourism forecasts for this year and next year have deteriorated, but expectations for exports, remittances and imports have improved. Overall, the pace of economic downturn in the coming months is expected to slow down further, with the increased fiscal stimulus played by foreign funding playing a greater role. The fiscal stimulus will be significant next year as well, until the inflow of tourism materially resumes at the end of the 2nd quarter and the beginning of the 3rd quarter.

Under the baseline scenario, a further reduction in the refinancing rate is expected, although only moderately. Also, annual inflation decreases, which is mainly due to the high base effect of the previous year and the maintenance of the GEL exchange rate at the current level.