Georgian economy to grow this year
Baku, Azerbaijan, September 14
By Tamilla Mammadova – Trend:
The economic growth in Georgia in 2019 will be 4 percent, Trend reports citing TBC Research.
As reported, if the lari rate does not stabilize, by the end of the year inflation will reach about 7 percent.
In the review, the agency emphasizes the tightening of the monetary policy of the National Bank of Georgia and notes that the monetary policy of the National Bank in early September will have a negative impact on the growth of the country's economy, although the negative effect will decrease if the lari strengthens.
“Tighter monetary policy, especially in the case of further increases in interest rates and other instruments, will have a negative impact on domestic demand and economic growth. If this gives the desired effect — the effective lari, as well as the exchange rate against the dollar — the overall negative impact on economic growth should not be significant," the report said.
"This is due to the fact that tightening the policy will negatively affect domestic demand, but a stronger dollar will have the opposite effect,” TBC Research notes, explaining that this will improve the mood of business and consumers.
As for the July economic growth, the researchers believe that the growth was quite high against the background of negative events. However, according to their estimates, the low base effect played a role. Analysts also believe that forecast economic growth indicators show a slight deterioration in dynamics.
The research also covers the dynamics of tourism, which says that the ban on flights from Russia and the weakening of foreign direct investment had a negative impact on the dynamics of the external sector. According the agency, compared with July, the dynamics of tourism was much better in August. In addition, the decrease in foreign direct investment was fully offset by an improvement in the trade balance over the same period.
However, the research noted that, despite a decline in Foreign Direct Investment (FDI), the GDP ratio is still high internationally. Analysts said that completion of the South Caucasus gas pipeline construction project also played a significant negative role in reducing FDI.
TBC Research also believes that as a result of the active phase of the deep sea port in Anaklia and large-scale energy projects in Georgia, the flow of FDI into the country will increase significantly.