
Geostat has published its rapid estimate of real GDP growth for the fourth quarter of 2016. The estimated growth stands at 1.2%, which is 1.7% lower than the value forecasted in the last update of our model. Given the latest data, Georgian real GDP growth in 2016 is estimated as having been 2.2% (0.5 percentage points lower than projected by our model).

Geostat has updated its GDP growth estimate for the third quarter of 2016. The Q3 growth rate stands at 2.2%, which was 1.3% below the ISET PI’s forecasted value. As a result of the update, the growth forecast for Q4 of 2016 was revised downward to 2.9% from the 4.1% projected in October.

According to Geostat’s rapid estimates, real GDP grew by 1.5% in September 2016, while the growth rate for Q3 stood at 2.2% year over year (YoY). The estimated third-quarter growth was thus 1.3 percentage points lower than ISET-PI’s GDP forecast for the quarter. One should note that the data from September are likely to include a very high services component (revenues from the tourism sector). Therefore, the quarterly growth number is likely to be revised upward in the future as more data comes in.

Based on the latest data, we expect annual growth in 2016 to be 3.3%. This is just 0.1% below the recently released annual economic growth projections of the International Monetary Fund (IMF) and 0.2% lower than the annual forecast of the National Bank of Georgia.

The IMF’s projection for real GDP growth in Georgia in 2017 was revised upward to 5.2% from the predicted 4.5% in April. This is the highest projected regional growth rate and is certainly very encouraging. Despite this, Georgia remains a small economy, where GDP growth has always been highly correlated to the economic performance of its large trading partners.