In October 2014, Georgia’s GDP growth slowed to 3.5% from 4.1% the month before. This slowdown is consistent with ISET-PI’s GDP forecast, according to which the economy is expected to increase by only 3.6% in the fourth quarter. Annual growth, however, is likely to be closer to the 5% mark. Given the sluggish growth dynamics of the global economy in 2014, this is a strong result for Georgia. According to the IMF Regional Economic Outlook, the EU and Russia, Georgia’s regional partners, are stagnating, while the Caucasus and Central Asia (CCA) countries are expected to grow by merely 2.6% this year.
The fall in net exports was the main factor putting downside pressure on the Georgian economy, especially in the second half of 2014. Export growth declined sharply in August (by -13% in year-on-year terms) and the negative dynamics persisted in September and October as well. Exports kept falling, albeit at a lower rate (Chart 2).