BAKU, Azerbaijan, Sept.21
Tamilla Mammadova – Trend:
Domestic mobility restrictions necessary to control the coronavirus pandemic and a slowdown in tourism drove the largest output contraction in Georgia, Trend reports via the IMF.
As reported, poverty and unemployment also rose, undoing much of the progress of recent years. The authorities appropriately responded by strengthening healthcare and providing substantial assistance to vulnerable households and businesses, aided by sizeable donor support.
COVID-19 case numbers rose sharply in August before declining while vaccinations have accelerated, said the report.
The recovery has recently gained momentum with growth now expected to reach 7.7 percent in 2021. This is a significant upgrade from earlier expectations and implies that output will exceed its 2019 level this year.
Robust growth in remittances and exports, and early signs of a faster than expected rebound in tourism have supported the recovery and should contribute to a narrowing of the current account deficit compared to its elevated 2020 level. Inflation accelerated to 12.8 percent year-on-year in August, largely reflecting utility price increases, higher commodity and food prices, and elevated input costs, but is expected to decline rapidly in 2022 as these temporary effects fade.
The Financial Sector Assessment Program (FSAP) found that the authorities’ regulatory reforms in recent years and the policy actions taken following the COVID-19 shock have helped support financial sector resilience, including on account of strong pre-pandemic bank capital and liquidity buffers and profitability.
---
Follow the author on Twitter: @Mila6197935