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TBC Capital predicts economy to return to pre-crisis levels in Georgia

Business Materials 17 September 2020 17:33 (UTC +04:00)
TBC Capital predicts economy to return to pre-crisis levels in Georgia

BAKU, Azerbaijan, Sept.17

By Tamilla Mammadova – Trend:

In the baseline scenario, TBC Capital expects tourism inflows to drop by 83 percent year-on-year in 2020, meaning almost no tourism inflows through the remaining period of 2020, Trend reports with reference to TBC Research Group at Georgian TBC Bank.

As reported, 2021 should be a year of recovery, however the inflows still being down by around 50 percent compared with the 2019 level. The inflows are expected to exceed pre-crisis levels by 2022.

According to the report, Georgia’s tourism industry has demonstrated resilience and strong potential of growth as evidenced by 20 percent growth in the months before COVID-19 breakout, despite Russia’s flight ban in summer 2019.

The GDP decline is expected to be in the range of 5-5.5 percent in 2020, however, in the conditions of the virus increase, without additional fiscal stimulus, the 2020 growth will deviate to the lower limit of the forecast.

The investment company predicts that in 2021 the economy will return to pre-crisis levels. Before the resumption of tourism, fiscal spending remains the main driver of growth. By the end of the year, inflation will return to 3 percent.

"Despite the relatively low rate of inflation, a sharp decline in the monetary policy rate is not expected, as the exchange rate remains a significant risk factor for rising prices," TBC Capital suggests.

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