Baku, Azerbaijan, April 6
By Leman Zeynalova – Trend:
Inflation in Georgia is likely to rise from 2.1 percent in 2016 to 4.2 percent in 2017 under currency depreciation and an excise tax increase, the Asian Development Bank (ADB) said in its latest report.
Moreover, ADB believes that a higher fuel excise tax from January 2017 is projected to add some 0.8 percentage points to the inflation in 2017, and higher inflation will render a lower policy interest rate unlikely before next year.
Inflation in the country is 2018 is expected to reach 4.5 percent.
“External factors held growth at 2.7 percent in 2016, but higher capital spending and corporate tax reform should permit growth to reach 3.8 percent in 2017 and 4.5 percent in 2018,” said the report.
Increased capital outlays are expected to push growth to 3.8 percent in 2017 and 4.5 percent in 2018, when the impact of infrastructure spending is expected to be the greatest.
Higher domestic consumption and a modest recovery in exports will contribute to growth and employment in 2017, according to ADB.
“Two pacts with European countries—the Deep and Comprehensive Free Trade Area and the European Free Trade Association—and the expected ratification by mid-2017 of a free trade agreement with the People’s Republic of China should expand Georgia’s access to markets engaged in a third of world trade, thereby bolstering its export potential along established routes,” said the report.
ADB believes that the main risks to Georgia’s economic growth are continuing sluggishness in external demand and further depreciation of the national currency.
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