ECA Economic Update by Sebastian Molineus, World Bank Regional Director for the South Caucasus
The World Bank presents Economic Update for the ECA region.
This report has been quite challenging to produce, if I’m honest, given the very dynamic nature of the current COVID-19 pandemic, which is why in this report we have taken a scenario analysis approach, in terms of our economic findings, and determining the economic impact of the virus on the economies in the Europe and Central Asia region.
The likely scenario is that: 1) the region is going to fall into recession in 2020; 2) that growth for the economy is going to contract between 2.8 and 4.8 percent, this year 2020, and that in 2021 we will see an economic rebound and recovery taking place.
There are three key policy measures that the report highlights: 1) it is absolutely critical for governments to act swiftly and decisively in terms of supporting and bolstering their healthcare systems; 2) to insure that the poor and the vulnerable are not left behind and that there are appropriate social protection and safety nets put in place and; 3) That you have strong economic recovery programs in place, once the most onerous restrictions are lifted.
Now, the World Bank Group is responding decisively to support countries around the world to respond to the crisis. We have put together a 14 billion dollar Fast-track Facility to support the immediate healthcare and social protection needs, and in addition we are providing 160 billion dollars over the next 15 months to support the economic recovery process.
Now, turning to Georgia. In Georgia we can expect a fairly substantial economic impact due to the COVID-19 crisis. This is mainly due to the travel bans, which of course will impact tourism, as well as the containment measures which are having an impact on domestic demand here in Georgia. We expect that the GDP will contract somewhere between -0.2 percent and 2 percent in 2020, before seeing an economic rebound in 2021. And I would like to say that very fortunately, the government has taken fiscally prudent measures, as well as accumulated capital buffers, which allows it to now actively respond to the crisis.
I would like at this point also highlight how decisively and swiftly, and firmly the government has acted, in terms of measures to protect the healthcare system to ensure that those that are most impacted, both households and businesses are protected, and to start formulating an economic recovery plan. And in fact, the government of Georgia has received strong praise globally for its effort to fight the pandemic, and to keep the death toll to a bare minimum, and I think that this praise is well deserved.
The World Bank has been a very strong partner. We've been committed to Georgia since day 1, since its independence in the 1990s, through the 2007 and 2008 financial crisis, and now we also stand firmly by Georgia's side during this current pandemic. In fact, we are currently working with the government, we've been working with them since day 1 of this crisis, and we are putting together and formulating 3 different projects or interventions to support the people of Georgia: 1) to support and protect, and to build the healthcare systems and to address those that are most impacted by the crisis, through targeted social protection measures; 2) we want to ensure that we have a broader social protection and safety net that is input in place over the coming months to be able to support the people of Georgia and; 3) we want to ensure that strong economic recovery is assured for, supporting the private sector that is most hard hit by the COVID-19 crisis for example, in tourism, for example in agriculture and other key sectors that are prone to some of the trade shocks that are currently occurring.
Finally I would like to mention that today is a special day for Georgia, it's April 9, and this is a day that has in many ways led to Georgia independence, and for me what is critical - it has shown the resilience of the Georgian people, and it is with this in mind, and also Georgia's coat of arms - "strength in unity" - that I would like to end my message and say that jointly, with the development partners, the government, all stakeholders across politics and society, and the private sector, that we can jointly survive and to actually come out of this better.