BAKU, Azerbaijan, Dec. 23
By Tamilla Mammadova – Trend:
A prolonged COVID-19 spread could harm investment, dampen external demand for longer —especially tourism—and weaken financial stability in Georgia, Trend reports via the International Monetary Fund's (IMF's) report.
"Restructured loans are a concern and could lead to a further deterioration in credit quality as would exchange rate depreciation. Financial volatility in neighboring countries could also exacerbate lari volatility, reverse the declining trend on inflation, and reduce demand in the short term, hindering the recovery," the report said.
As reported, delays in structural reforms may deepen the scarring effects from the crisis.
"Delays in establishing the new Parliament may exacerbate uncertainty and deteriorate the recovery. The newly announced containment measures also pose additional risks to growth. On the upside, a faster-than expected development and distribution of an effective vaccine could boost confidence, support a rebound in tourism and investment, and accelerate the recovery," the IMF said.
"Given pressures in the healthcare system, the government announced containment measures to be implemented at varying degrees through January 2021 – including a shutdown of non-essential businesses, a countrywide curfew, restrictions on public transportation, and restaurant closures for dine-in services," the report said.
Growth in the first quarter of 2020, at 2.2 percent, represented a significant deceleration in economic activity but remained positive.
As reported, the full impact of the lockdown and the COVID-19 shock materialized in the second quarter when output declined by 12 percent year-on-year. Although economic activity sharply decelerated, Georgia performed on par with peers.
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