BAKU, Azerbaijan, November 25. Georgia's economic growth is expected to moderate to 6 percent in 2023, and 4.5 percent in 2024, the European Bank for Reconstruction of Development (EBRD) forecasts, Trend reports.
Georgia's economic growth is undergoing a moderation phase, the bank noted, following an initial period of exceptionally high levels. Following two consecutive years of double-digit growth, the country's GDP expanded by 7.6 percent year on year in the first half of 2023, primarily fueled by the construction, trade, tourism, and financial sectors.
"These trends lifted foreign reserves to $5.4 billion (around 4.9 billion euros) in July 2023, covering 4.2 months of imports, and enabled the Georgian lari to remain broadly stable after strong appreciation in 2022," the bank said.
Thus, according to the EBRD, Georgia is poised for continued strong economic growth in the near term. The primary factor posing a downward risk to this forecast is the geopolitical uncertainty in the region. Conversely, the prospect of achieving EU candidate status has the potential to invigorate growth-supporting reforms and bolster economic stability.
Meanwhile, as per the bank's estimations, inflation in Georgia has dipped below the designated target. Following two consecutive years of exceeding the central bank's 3 percent target, the annual inflation rate decelerated to 0.7 percent in September 2023. This decline was attributed to stringent monetary policies, reduced commodity prices, and a strengthened domestic currency. The central bank remains cautious, considering the sustained high level of cash inflows from migrants and robust domestic demand.