EBRD: Georgia's economy to shrink in 2020
BAKU, Azerbaijan, May 13
By Tamilla Mammadova - Trend:
Georgia recorded another year of robust growth in 2019, Trend reports via the latest forecast by the European Bank for Reconstruction and Development (EBRD).
As reported, GDP expanded by 5.1 percent, supported by another record year for the number of international visitors (7.7 million, of which 5 million were tourists staying overnight). Amid rising inflation the policy rate was increased from 6.5 percent in July 2019 to 9 percent by December 2019.
As the EBRD noted, while inflation remained elevated in the first four months of 2020, the authorities cut the policy rate by 0.5 percent in April as the ongoing reduction in demand is expected to create downward pressure on prices.
"Depreciation pressures reappeared in March 2020 on the back of increased volatility in the global financial markets and an expected drop in tourism receipts. To help stabilize expectations and ensure financing of the widening external and fiscal deficits, the authorities secured additional financing from multilateral creditors, the report said.
According to the EBRD, looking ahead, the hospitality sector will be severely hit as countries contain the spread of the coronavirus and ban travel abroad. With tourism receipts normally amounting to nearly one-fifth of GDP, the negative impact will be widespread across many sectors.
"We expect the economy to shrink by 5.5 percent in 2020 before recovering by 5.5 percent in 2021 in Georgia," the EBRD noted.