BAKU, Azerbaijan, April 27
By Tamilla Mammadova - Trend:
Restrictive containment measures introduced by government in Georgia are weakening the region’s consumer demand, particularly in tourism, hospitality, and retail sectors, Trend reports referring to the report on the Middle East and Central Asia of International Monetary Fund (IMF).
The largest impact is likely to be felt by small- and medium-sized enterprises (SMEs) of Georgia due to their limited buffers, the report said.
"A global slowdown in tourism would further constrain growth, particularly in countries where inbound tourism expenditure constitutes a high percentage of Gross Domestic Product (GDP) or exports, including Georgia", said IMF.
According to the fund, some flexible currencies such as the Georgian lari have depreciated to historic lows, in line with emerging markets.
"Georgia has announced fiscal packages of 1–3 percent of GDP, including addressing the indirect economic impact of pandemic. Georgia has loosened some previously tightened macroprudential measures," IMF said.
As reported, monetary and exchange rate policies will play a critical and complementary role to play to counter impacts of pandemic-induced demand and trade shocks. Therefore, in countries with flexible exchange rates, credible monetary frameworks, low inflation, and relatively moderate currency mismatches, including Georgia, exchange rates could act as shock absorbers.
According to the IMF forecast, real GDP growth in Georgia in 2020 will reach -4 percentage points, and in 2021, it will reach 3 percentage points. In addition, Consumer Price Inflation in Georgia in 2020 will amount to 4.6 percentage points, and in 2021 it is predicted at 3.7 percentage points. In addition, the General Government Overall Fiscal Balance in Georgia in 2020 will reach -7.8 percentage points, and in 2021 it will reach - 3.8 percentage points.
The Current Account Balance in Georgia in 2020 will be -10.5 percentage points, and in 2021 it will reach - 6.9 percentage points, said the report.
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