Indexes

The global economy continues to recover in Q2 2021 following the deep economic crisis caused by the COVID-19 pandemic in 2020. The growth accelerated as a result of the easing of virus-containment restrictions in most countries. IMF (July 2021) estimates that global GDP growth will reach 6% year over year (y/y) in 2021. Though this rebound is uneven – compared to the previous estimates (April 2021), growth projections for emerging markets and developing economies are revised downward.

The World Bank (June 2021) estimates that global GDP growth will reach 5.6% year over year (y/y) in 2021. Though thus rebound is uneven, with growth concentrated mainly in advanced economies and developing countries set for a slower recovery.

The COVID-19 outbreak had a devastating effect on the Georgian economy in 2020. Real GDP contracted by 6.1% according to Geostat’s rapid estimates of economic growth. This was the worst performance of real GDP growth in the country in more than two decades.

According to the preliminary statistics released by GeoStat, Georgia’s real GDP contracted by 3.8% year over year (y/y) in Q3 2020. As a result, the estimated real GDP declined by 5.0% in the first nine months of 2020, which is in line with the International Monetary Fund’s (IMF) and National Bank of Georgia’s (NBG) latest projections of -5% y/y (from October and November correspondingly).

The COVID-19 outbreak has negatively affected the Georgian economy through a reduction in FDI, exports of goods and services, and remittances. In addition, uncertainties caused by the pandemic and containment measures hit consumption and domestic investment. As a result of this reduction in aggregate demand, combined with increased production costs due to pandemic-related constraints, GDP is expected to contract by 5% in 2020 according to NBG’s latest monetary report.