Georgia’s economy is expected to grow by 8.5% in 2021 driven by an expansion in agriculture, industry, and services and the gradual lifting of restrictions imposed due to the coronavirus disease (COVID-19) pandemic, the Asian Development Bank (ADB) said in a report today.
According to the Asian Development Outlook (ADO) 2021 Update, ADB’s annual flagship economic publication, Georgia’s economy is projected to grow further by 6.5% in 2022. The report noted the country’s strong rebound from a 6.2% contraction last year to register growth of 12.7% in the first half of 2021 following significant government support to firms and households, and sizable assistance from development partners.
“With encouraging growth figures and optimistic business expectations, the prospects for Georgia’s economic growth are looking positive this year and next, but the country must ensure the accelerated pace of vaccination continues in the months ahead,” said ADB Country Director for Georgia Shane Rosenthal. “ADB is fully committed to helping Georgia overcome COVID-19 and maintain sustainable economic growth.”
Growth in private consumption, a 15% rise in net exports of food, beverages and industrial supplies, and public investment spending equaling 8% of gross domestic product (GDP) all contributed to Georgia’s economic growth. Foreign exchange inflows are expected to accelerate following the reopening of land borders in June.
Yet, inflation rose following rapid price increases which began in March for food, health care, transport, and utilities due to higher import prices and the removal of subsidies for certain items. ADO forecasts inflation to accelerate to 9.5% in 2021 and slowing to 4.0% next year.
Despite the pickup in growth, both unemployment and the rate of absolute poverty rose to 21.9% and 21.3% respectively in the first quarter of 2021, each up by about 3 percentage points.
The current account deficit narrowed slightly from the equivalent of 11.2% of GDP in the first quarter of 2020 to 10.7% at the same point this year, mainly from higher exports of copper ore and concentrate, wine and spirits. Accordingly, ADB projects a faster narrowing of the current account deficit in both 2021 and 2022.