ISET-PI has updated its forecast of Georgia’s real GDP growth rate for the third and fourth quarters of 2018. Here are the highlights of this month’s release:

Growth projections for the 3rd and 4th quarters of 2018 were revised downward by less than 0.1 percentage points. They now stand at 7.2% and 6.4% respectively.

Recently, Geostat published its preliminary estimate of real GDP growth for August, which now stands at 2%. As a result, the real GDP growth estimate for the first eight months of 2018 was reduced to 4.8%.

Based on the August data, we expect annual growth in 2018 to be 6.3%. Although the growth forecast remains unchanged, we expect a downward correction of the annual GDP growth numbers towards the end of the year.

It is noteworthy that the average real GDP growth in the first two months of the third quarter of 2018 was only 3.3%. ISET-PI’s growth projection for the third quarter of 2018 is expected to have overestimated the actual quarterly growth rate due to a combination of factors. Most importantly, our model has not yet fully taken into consideration the negative consequences of the Turkish currency crisis and the announced, or already enacted, tightened credit restrictions (the effect of these was partially reflected in the August growth data).