Georgia continued to demonstrate economic growth in the first eleven months of the last year as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, businesses reopened and tourists tentatively started to return.
Gross domestic product (GDP) grew by 10.7 percent year-on-year in January-November after contracting 5.9 percent in the same period a year earlier, the National Statistics office said. In November alone, the economy expanded by 12 percent, compared with a 7.7 percent contraction a year ago. Growth was recorded in all sectors of the economy except for construction.
Georgia’s highly tourism-reliant economy has been hit especially hard by the COVID crisis and lacks the resource-extraction or manufacturing base that has helped cushion the blow in some other ex-Soviet countries.
The country started its economic recovery in April last year when it recorded 44.8 percent year-on-year growth. Economic recovery continued to gather pace as the country eased the majority of the restrictions it had imposed to curb the coronavirus pandemic, although the growth had been gradually slowing since April.
The country brought some restrictions back in August amid a hike in the number of infections and fatalities.
In July, Georgia revised its economic growth forecast to 7.7 percent from a previous projection of 4.3 percent in 2021 amid signs of economic recovery and in line with the International Monetary Fund’s (IMF) current projection.
The central bank projected economic growth at 10 percent in 2021 as the country continued to demonstrate economic recovery and a rise in demand after months of contraction due to the restrictions imposed to curb the coronavirus pandemic.
The IMF said in July that Georgia’s GDP was now projected to grow 7.7 percent in 2021 and 5.8 percent in 2022. In October, the IMF said that significant risks, including slow vaccination, remained to Georgia’s economic recovery.
The World Bank said in June that Georgia’s economy was projected to recover in 2021, growing by 6 percent, with the key baseline assumption that there would be no further severe waves of COVID-19 infections that necessitate additional lockdowns and ongoing political impasse is resolved. The recovery will be supported by fiscal stimulus in the form of accelerated capital spending, tax deferrals, accelerated VAT refunds, and targeted support for the most affected businesses, as well as higher social spending.
Under a baseline scenario in which no third wave of infections materialises and a significant share of the population is vaccinated by 2022, economic growth could recover to 5.0 percent in 2022 and 2023.
In August, Fitch Ratings has revised the outlook on Georgia’s long-term foreign-currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘BB’.
The country projects 6 percent economic growth in 2022.