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Inflation in Georgia in medium term to be close to target level

Business Materials 23 December 2020 14:33 (UTC +04:00)
Inflation in Georgia in medium term to be close to target level

BAKU, Azerbaijan, Dec. 23

By Tamilla Mammadova – Trend:

Inflation in Georgia in the medium term will be close to the target level - within 3 percent, Trend reports via the National Bank of Georgia.

"According to the baseline scenario, inflation will remain above the target in the first quarter of 2021, and will be close to the target level in the medium term," said President of the National Bank of Georgia Koba Gvenetadze.

The bank predicts that real GDP will decrease by 5 percent in 2020, but expects that against the background of fiscal stimulus and lending activity, it will grow by 5 percent in 2021.

Along with the main macroeconomic forecast, the head of the National Bank introduced an alternative scenario, suggesting a more serious and prolonged economic crisis caused by the COVID-19 pandemic.

"This may be due to the delay in the vaccination process and / or unwillingness to travel abroad due to fear of the virus. In this regard, the appearance in several countries of a new strain of COVID-19, which is spreading faster than the existing virus, deserves attention," Gvenetadze said.

According to him, the delay in the availability of the vaccine will prolong the restriction of traffic between the countries, and this will further affect the world tourism, which will exacerbate the economic crisis in Georgia.

As reported, inflation in Georgia from January through September 2020 amounted to 1.7 percent, for the year - 3.8 percent. The target inflation rate for the current year, as well as for the next two years, was determined by the National Bank of the country at the level of 3 percent.

In 2019, consumer prices in Georgia rose by 7 percent (the inflation target was set by the National Bank at 3 percent) after rising by 1.5 percent in 2018.

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