BAKU, Azerbaijan, August 28
By Tamilla Mammadova – Trend:
The economic slowdown in June eased 2 times relative to April lows in Georgia, Trend reports via the Renaissance Capital’s report.
As reported, economic activity continues to recover in Georgia, although revenue from international tourism is still lagging.
The decline in GDP eased to -7.7 percent year-on-year in June, from -13.6 percent in May. The most robust dynamics were seen in mining and utilities – which delivered positive annual growth in June. According to the company, activity in the agricultural sector could improve in 2020 relative to 2019 on the back of the summer season.
"We also expect to see a gradual improvement in services sector activity in July-August, given a rebound of domestic tourism this year amid restrictions on international travel. Meanwhile, the unemployment rate has not grown much, and nor has the number of bankruptcies. This partially reflects the effect of government support for employment and business. Tourism recovery expected in 2021 after a tough 2020," the report said.
As COVID-19 risks remain high for Georgia – which avoided the first wave, the company doesn't rule out that the country will fully open up only in 2021. It expects tourism flows in 2021 to rebound to 2019 levels.
"We also expect to see a gradual improvement in services sector activity in July-August, given a rebound of domestic tourism this year amid restrictions on international travel. Meanwhile, the unemployment rate has not grown much, and nor has the number of bankruptcies. This partially reflects the effect of government support for employment and business. Tourism recovery expected in 2021 after a tough 2020," the report said.
As COVID-19 risks remain high for Georgia – which avoided the first wave, the company doesn't rule out that the country will fully open up only in 2021. It expects tourism flows in 2021 to rebound to 2019 levels.
As reported, from January through July 2020, merchandise exports and imports decreased by 17 percent and 18 percent year-on-year, respectively, which resulted in an improvement in the trade balance, with the deficit decreasing to six-year lows. Moreover, after a drop in April-May the inflow of remittances into Georgia rebounded during the summer months. The recovery was led by money transfers from Italy and Greece, while in July inflows from Russia also returned to growth in year-on-year terms.
The drop in revenue from international tourism should also be partially compensated by a proportionate decrease in the expenditure of Georgians on external travel, as imports of travel services and passenger transportation account for above 30 percent of related exports.
"Given recent developments we expect the current account deficit in 2020 to remain below 10 percent and improve to 5-6 percent of GDP in 2021-2022," the report said.
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