The third quarter of 2022 was marked by a “perfect storm” of global challenges. Due to the ongoing geopolitical, economic, and ecological turbulence, with inflation reaching its highest point in decades, the world economy remains volatile. The Russian invasion of Ukraine, coupled with a precarious US economic recovery (marked by broadening inflationary pressures, tight financial conditions, and a projected GDP slowdown for 2022), economic threats arising in the euro area (energy security, rising cost of living, and diminished growth), and surges of Covid-19 in China have all led to low estimates for global economic growth from the IMF. The IMF World Economic Outlook projects a slowdown to 3.2% in 2022 and 2.7% in 2023, compared to the 6% growth observed last year (IMF, October 2022). This is the lowest growth rate observed since 2001 (excluding the 2008 global financial crisis and during the critical phase of the Covid-19 pandemic).
Despite these global challenges, Georgia, the South Caucasus, and Central Asian countries have, for now, been spared from the fallout. Georgia’s neighbors are expected to show moderate to strong growth for 2022: Armenia (+7% y/y), Azerbaijan (+3.7% y/y), and Türkiye (+5% y/y). The Russian economy, on the other hand, is expected to fall by 3.4% y/y – an upward adjustment from previous forecasts. The projected growth in emerging markets and developing economies (EMDEs) shifted upwards as well; where EMDEs are expected to grow by 3.7% y/y, compared to the 6.6% growth of 2021 (IMF, October 2022).