The global recovery from both the COVID-19 pandemic and Russia's invasion of Ukraine is progressing slowly and unevenly. While there was initial economic resilience earlier in the year, marked by a rebound in reopening and efforts to reduce inflation, it is premature to feel reassured. Economic activity has yet to fully return to pre-pandemic levels, particularly in emerging markets and developing economies, and regional disparities are widening. Various factors are impeding the recovery, including the enduring effects of the pandemic and the war in Ukraine, as well as increasing geoeconomic fragmentation. Additionally, cyclical challenges, such as the impact of necessary monetary policy tightening to curb inflation, the withdrawal of fiscal support amid high debt levels, and extreme weather events, contribute to the complexities of the global economic landscape. IMF World Economic Outlook projects that the anticipated global growth is expected to decelerate, decreasing from 3.5 percent in 2022 to 3.0 percent in 2023 and further to 2.9 percent in 2024. These forecasts fall below the historical average of 3.8 percent observed in 2000-2019 (IMF, October 2023).

If we take a close look at the south Caucasus region, Georgia’s neighbors are expected to show moderate to weak growth for 2023: Armenia (+7.0 percent y/y), Azerbaijan (+2.5 percent y/y), Türkiye (+4.0 percent y/y), and the Russian economy is also expected to show positive 2.2 percent y/y (surged from 1.5%) growth. The output in emerging markets and developing economies (EMDEs) is expected to grow by 4.0 percent in 2023, as well as in 2024 (adjusted from 4.1%) (IMF, October 2023).

According to GeoStat’s latest GDP growth statistics, the Georgian economy grew by 5.7 percent in the third quarter of 2023. Moreover, it is expected that improved investment dynamics will persist, hence, the National Bank of Georgia sticks with the previous real GDP growth expectations for 2023 as 6 percent (NBG, August 2023).