EBRD projects Georgian economy to grow 8% in 2022
The European Bank for Reconstruction and Development (EBRD) has raised Georgia's economic growth forecast for 2022.
According to the organization, economic growth this year will reach 8%, which is 5 percentage points higher than the previous forecast. By 2023, economic growth is projected at 5%.
"In the first 7 months of 2022, Georgia had a fairly strong economic growth at the level of 10.3%. The recovery of the tourism sector continued, and the sector's revenues recovered to 80% of the pre-pandemic level of 2019.
Double-digit growth was also recorded in a number of other sectors, including energy, transport and manufacturing.
The influx of Russian enterprises and ICT specialists to Georgia, as well as their remittances, also helped the tourism and services sectors.
At the same time, the trade deficit increased as import and export levels increased by 30%. However, the growing inflow of foreign currency was enough to cover this deficit, which ultimately contributed to the strengthening of the GEL in the first half of the year. This had a positive effect on Georgia's reserves.
The strengthening of the GEL reduced the impact of rising prices for imported goods, which resulted in a decrease in inflation from 12.5% to 10.9%. As a result, the National Bank managed to keep the refinancing rate unchanged at 11%.
In conditions of high geopolitical uncertainty, the government was able to sign the IMF program for $280 million. Georgia's GDP is expected to grow by 8% in 2022, the negative consequences of the ongoing war in Ukraine have not materialized.
However, a relatively more stable economic growth of 5% is forecast for 2023. The risks are still high and there is a threat of negative external shocks", the EBRD writes.
Together with Georgia, the EBRD raised the growth forecast in Armenia to 8%; at the same time, Azerbaijan's forecast has not changed and still stands at 4.5%.
The bank raised its forecast for economic growth in Turkey to 4.5%, which is 2.5 percentage points higher than the previous forecast. In Ukraine, the EBRD predicts a 30 percent recession. In Russia, the economy is expected to decline by 5%, in Belarus – by 5.5%.