Quarter 1 2019, Macro Review | Georgian economy in Q1: the calm before the (possible) storm
24 May 2019

According to Geostat’s rapid estimates of GDP growth, Georgia’s economy continues expanding at a moderately high pace, reaching 4.7% in the first quarter of 2019. Geostat’s Q1 growth figure fell below the National Bank of Georgia’s (NBG) 5% projection for annual growth in 2019. Meanwhile, based on the March data, ISET PI’s annual GDP growth forecast was 4.9%.

The main external driver of GDP growth in the reporting period was increasing net export, while remittances from abroad and tourism inflows had a limited impact in Q1 2019. Fiscal stimulus was the main internal factor which accelerated the economy, while deteriorating business sentiments and the new wave of credit regulations had a negative impact on growth. The further worsening of the economic situation in Turkey caused by a currency crisis and political instability is the main potential risk for economic growth in 2019, transmitting through the trade, remittances, and tourism channels.

In Q1 2019, the CPI inflation rate fluctuated around the targeted level as the new increase in the excise tax rates on tobacco products was balanced by downward pressure on inflation from weak aggregate demand. Overall, the annual inflation in January-March stood at 2.7% YoY.