ISET-PI has updated its real GDP growth forecast for the third and fourth quarters of 2020. Here are the highlights of this month’s release:

ISET-PI’s forecast of real GDP growth for the third quarter (July-September) of 2020 remains at -11.6%, unchanged from last month’s prediction. The third estimate for the fourth quarter (October-December) growth forecast stands at -11.8%. Notably, our econometric model depends only on retrospective information (past observations), thus, the abnormally large negative growth of real GDP during the state of emergency period causes an overestimation of the contraction in the following quarters.

GeoStat recently published its preliminary estimate of real GDP growth for August, which currently stands at -5.3%. As a result, the real GDP growth estimate for the first eight months of 2020 is -5.6%.

Based on August’s data, we expect annual growth in 2020 to be -8.6%. Once again, this is most likely an overestimation of the severity, since the nature of the shock (a transitory lockdown event) in the second quarter of 2020 does not have relevant analogues in the Georgian data.