March 2020 GDP Forecast | Georgia’s growth prospects before COVID-19, and how things may change due to pandemic
31 March 2020

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

The annual real GDP growth for 2019 amounted to 5.2%, while the real GDP growth rate reached 5.1% year-on-year for January 2020.

Before taking into consideration the negative consequences of COVID-19 on the real GDP growth forecast, ISET-PI predicted 4.7% and 5.4% growth for the first and second quarters of 2020 respectively, based on data from January 2020.

Consequently, the annual growth in 2020 was expected to be 4.8% in the worst-case scenario, and 5.9% in the best-case or an average long-term growth scenario. Our middle-of-the-road scenario (based on the average growth in the last four quarters) predicted a 5.2% increase in real GDP.

After considering the negative impacts of COVID-19 on Georgia’s economy, via tourism, remittances, trade, and restricted domestic production and service provision due to the strict social-isolation measures, the real GDP growth is expected to decrease notably, depending on the length and severity of the pandemic.

It is projected that the real GDP may decline by 0.82 percentage points if there is no international, outbound, or domestic tourism between March-May of 2020. While it could reach 1.87 and 5.37 percentage points if the restrictions last until July or December, respectively.

Taking into consideration the correlation between the growth rates of Georgia and its partner countries, and Bloomberg’s real GDP growth scenarios of change for the world’s leading countries, Georgia’s real GDP growth in 2020 could vary from 0.82% to 3.91% (assuming a 5% baseline growth).

Based on various scenarios of a net decline in money transfers (from a 10% to a 50% decline), the share of household real consumption spending (considering the exchange rate and inflation) may change from +0.3% to -5.5%.