April 2016 Macro Review | Resilience to macroeconomic shocks – a good foundation for Georgia’s long-term development plans
20 April 2016

According to GeoStat estimates, real GDP grew by 2.6% year over year in February 2016. This growth rate is an improvement over the 0.8% growth observed in the previous months. Still, in order to reach the predicted quarterly 2.9% growth (the ISET-PI forecast for Q1 real growth), the economy would have to have expanded by at least 5.4% in March. While the actual growth for March is likely to be lower than that figure, the increases in the consumer and business confidence indices (CCI, BCI) in the last month can be interpreted as good signs for the economy going forward. The resilience to macroeconomic shocks which the Georgian economy exhibited in 2015-2016 provides a good foundation for the country’s long-term development plans.

The aggregate demand indicators, consumption of electricity and VAT payers’ turnover, grew in February by 3.6% and 10.4% year over year respectively. The growth in electricity consumption can, in particular, be considered a good indicator for tracking the real increase in the country’s economic activity. Last year, for example, the total electricity consumption in Georgia was significantly affected by the decline in the production of the “Georgian Manganese” company. This was due to the collapse of world commodity prices and the price of manganese in particular. As one can see from Figure 2, the growth in the electricity consumption indicator (direct consumers) seems to be on the path to recovery since the beginning of the year. Furthermore, global manganese prices increased by 34% in February, reaching April 2015 levels.