Geostat has updated its GDP growth estimate for the third quarter of 2020. The Q3 growth rate stands at -3.8%. As a result, the real GDP growth estimate for the first nine months of 2020 is -5%. As a result of the update, the growth forecast for Q4 of 2020 was revised to -3.3%. ISET-PI’s first forecast for Q1 of 2021 puts GDP growth at -1.4%.

ISET-PI’s forecast of real GDP growth for the third quarter (July-September) of 2020 remains at -11.6%, unchanged from last month’s prediction. The third estimate for the fourth quarter (October-December) growth forecast stands at -11.8%. Notably, our econometric model depends only on retrospective information (past observations), thus, the abnormally large negative growth of real GDP during the state of emergency period causes an overestimation of the contraction in the following quarters.

The COVID-19 outbreak has negatively affected the Georgian economy through a reduction in FDI, exports of goods and services, and remittances. In addition, uncertainties caused by the pandemic and containment measures hit consumption and domestic investment. As a result of this reduction in aggregate demand, combined with increased production costs due to pandemic-related constraints, GDP is expected to contract by 5% in 2020 according to NBG’s latest monetary report.

Recently, Geostat has released the preliminary estimate of real GDP growth for the second quarter of 2020, which now stands at -12.6%. The real GDP growth rate contracted by 7.7% and 5.5% year-on-year in June and July 2020, respectively. Consequently, the estimated real GDP for the first seven months of 2020 amounted to -5.8%.

Geostat has revised its rapid estimate of real GDP growth for the first quarter of 2020. The estimated growth now stands at 2.2%, which is 0.7 percentage points above the average growth rate previously estimated for Q1. The real GDP growth rate contracted by 16.6% and 13.5% year-on-year in April and May 2020, respectively. Consequently, the estimated real GDP for the first five months of 2020 amounted to 5.4%.