Quarter 1 2023, Macro Review | Georgian economy moves ahead, but fears of global headwinds mar the start of 2023
03 July 2023

The global economy remains in a volatile state amid the prolonged effects of the combined negative shocks of the pandemic, Russia’s invasion of Ukraine, high inflation and the tightening monetary policy. Although the global economy remained resilient at the beginning of the year, the situation is expected to worsen. In 2023 global economic activity is expected to slow down despite several major economies showing stronger than expected economic growth, despite a rapid reopening of China and robust consumption in the United States. While China is expected to recover, the growth in advanced economies is likely to decline. The growth of global output, estimated at 3.4% in 2022 is expected to decline to 2.8% in 2023. 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) (IMF, April 2023).

Given these global challenges, Georgia and the South Caucasus have been affected as well. Georgia’s neighbors are expected to show moderate to weak growth for 2023: Armenia (+5.5% y/y), Azerbaijan (+3% y/y), and Türkiye (+2.7% y/y). The Russian economy, surprisingly, is also expected to show positive, albeit weak economic growth (+0.7% y/y). The output in emerging markets and developing economies (EMDEs) is expected to grow by 3.9%, on pace with 4% growth observed in 2022.