ISET-PI has updated its forecast of Georgia’s real GDP growth rate for the second and third quarters of 2016. Here are the highlights of this month’s releases:

• The growth forecast for the 2nd and 3rd quarters of 2016 has not changed. They stand at 3.2% and 3.3% respectively.

• Based on this month’s data, we expect annual growth in 2016 to be 2.7% in the worst-case or “no growth” scenario, and 4.1% in the best-case or “average long-term growth” scenario. Our “middle-of-the-road” scenario (based on the average growth in the last four quarters) predicts a 3.4% real GDP increase in 2016.

The unusual stability of the economic indicators used in our model during April is reflected on our forecast of the second and third quarters’ GDP growth. None of the forecast figures changed by even a tenth of a percentage point since the last update. However, some sets of the predictor variables exhibited relatively significant monthly and yearly changes. One such set is related to the volume of Foreign Currency Current Accounts (FCCA). As these volumes are denominated in the national currency, in order to remove the exchange rate effect we recalculated them in dollar terms. The volume increased by 10% in monthly terms and by 51% in annual terms (see the graph below).