Sebastian Molineus, World Bank Regional Director for the South Caucasus Monday Monday said “the economic shocks from the war in Ukraine, as well as the current sanctions regime against Russia, are going to have major impacts that are being felt across the world, but will of course, be disproportionately felt here in the Europe and Central Asia region, as well as the South Caucasus and Georgia as well.”

Sebastian Molineus stated that for Georgia, “we initially had forecast 5.5% growth for 2022. We are now revising that growth forecast downward, and while it remains positive, we anticipate that it will fall substantially to about to 2.5% in 2022.”

World Bank Regional Director believes “Georgia is well positioned to manage this crisis, mainly because buffers remain reasonable.”

“The macro financial framework remains credible, and the banking sector entering into this renewed crisis is overall, strong and stable. So, this again leads us to believe that with the support of international partners, such as the World Bank, that we can weather this crisis jointly and come through this, as well.

In terms of recommendations, a few short-term and long-term recommendations of what Georgian can do moving forward. So, in the short term, we need to ensure that we ensure macroeconomic stability. We need to continue the implementation of inflation targeting monetary policy regime, that’s going to be important. And certainly, the fiscal reaction should not lose sight of fiscal sustainability. And we need to make sure that Georgia comes back to its fiscal rule that has served Georgia very, very well over the past few years. So that’s number one.

Social safety nets – this is also an important aspect in terms of the policy response. At the same time, we need to make sure that the targeted social assistance formula is really, you know, tweaked to ensure that it does reach those who need the social assistance most.

And then third, and finally, we need to make sure that we look out for opportunities to expand economic cooperation with countries less impacted by the crisis, and also help firms re-orientate away from some of the current export markets, for example, Russia to new export markets, be it in the European Union, Turkey, Central Asia and other areas as well,” he asserted.

Sebastian Molineus believes “we need to increase productivity across all sectors of the economy, increased competition and certainly continued the overall business enabling environmental reforms here in Georgia. Again, together I am confident that in strong partnership and collaboration between the Bank and the Government we can withstand and recover from this current shock as well.”