In March 2020 as a result of the COVID-19 pandemic, the global economy started to sink into what is expected to be the deepest worldwide recession since World War II. Despite unprecedented policy support, the majority of countries have failed to soften the fallout from the crisis. According to World Bank estimates, global GDP will contract by 5.2% year over year (y/y) in 2020. The United States and Euro Area are projected to shrink by 6.1% and 9.1% respectively, while the Chinese economy is expected to grow at just 1% in 2020. In addition, all of Georgia’s neighbors are expected to face an economic contraction this year: from -2.6% (Armenia) to -6% (Russia).
Thus, the COVID-19 pandemic is expected to negatively impact the Georgian economy due to both internal and external factors. Reductions in tourism, remittances, trade and foreign direct investment (FDI), coupled with declines in consumption, domestic investment, domestic production, and service provision will hit the economy in 2020. Real GDP growth is expected to decrease significantly, the extent depends on the length and severity of the pandemic. According to the National Bank of Georgia (NBG) and the International Monetary Fund (IMF), Georgia’s annual real GDP growth forecast amounts to -4%, while the World Bank predicts -4.8% in 2020.