November 2020 GDP Forecast | 2020 brought epidemic, war and oil crisis to the Caucasus – but the outlook is brighter for 2021
19 November 2020

GDP growth forecast for the fourth quarter of 2020. Here are the highlights of this month’s release:

Geostat has updated its GDP growth estimate for the third quarter of 2020. The Q3 growth rate stands at -3.8%. As a result, the real GDP growth estimate for the first nine months of 2020 is -5%.

As a result of the update, the growth forecast for Q4 of 2020 was revised to -3.3%. ISET-PI’s first forecast for Q1 of 2021 puts GDP growth at -1.4%.

Based on September’s data, we expect annual growth in 2021 to be -4.4%. This number is a little bit more optimistic than the forecast of the National Bank of Georgia (NBG) and International Organizations (ADB, IMF, and World Bank). It is worth noting that the ISET-PI’s annual growth forecast typically outperforms the others after September data is incorporated, but this year the economic landscape is riddled with significant uncertainties, which may not be fully reflected in any of the above-mentioned forecasts.

According to the recent Monetary Policy Report of NBG, real GDP will decrease by 5% in 2020 (NBG predicts a 4.5% decline in an optimistic scenario, and 6% decline in a pessimistic scenario), while it is expected to increase by 5% in 2021 (NBG predicts 6% increase in an optimistic scenario, and only 1% increase in a pessimistic scenario). NBG’s forecast of real GDP growth for 2020-21 remained unchanged compared to the previous publication.

Weak external demand negatively affected Georgia’s growth forecast, while strong lending positively contributed to our growth estimation.