ISET-PI has updated its forecast of Georgia’s real GDP growth rate for the first and second quarters of 2019. These are the main features of this month’s release:

ISET-PI’s forecast of real GDP growth for the first quarter of 2019 stands at 4.3%. The second estimate of the second-quarter growth forecast now stands at 4.6%.

Based on January’s data, we expect annual growth in 2019 to be 4.4% in the worst-case or “no growth” scenario, and 5.5% in the best-case or “average long-term growth” scenario. Our “middle-of-the-road” scenario (based on average growth over the last four quarters) predicts 4.7% real GDP growth.

ISET’s annual forecast is consistent with evidence coming from the National Bank of Georgia (NBG) and international development institutions. For example, the National Bank of Georgia’s expectation for real GDP growth remained unchanged at 5% in 2019. According to the recent monetary policy report, improved net export, enhanced consumption and investment supported by government capital spending, and moderate credit activity growth will positively contribute to real GDP growth. Moreover, the International Monetary Fund (IMF) has also decreased its growth forecast from 4.78% (estimated in October) to 4.6% in 2019. The IMF provided similar findings to the National Bank of Georgia, identifying some contributors to the real GDP growth: improved current account balance and the government’s high infrastructural spending. However, this authoritative institution identified threats coming from the recently introduced credit regulations and unstable economic conditions in the region.