Economic Monitor Georgia
Economic growth in Georgia remains strong, but is slowly approaching long-term potential growth again. The boom, which was fueled in particular by the influx of Russian immigrants, is slowing down. The value of the lari against the US dollar stabilized last year after a strong appreciation in 2022, inflation is falling, monetary policy is slowly becoming looser and trade is developing strongly, particularly due to re-exports. The high budget deficit has been reduced. Not all the potential benefits of the DCFTA with the EU has been exploited already.
WA 18 | October 2023
Macroeconomic Analyses and Forecasting
Overview
- 2023: real GDP projected to grow by 6.0%, still strong but slowing down as the positive effect of relocation of people (esp. from RUS) starts to fade out
- 2024: real growth of 5.0%, convergence towards long-term potential
- Lari stabilises around 2.60 GEL/USD after strong appreciation in 2022, sizeable FX interventions by the NBG to reduce exchange rate volatility
- Strong reduction in inflation (Jul-23: 0.6% yoy) due to falling international commodity prices and transport costs as well as lari appreciation
- Only gradual easing of tight monetary policy (policy rate reduced by 1 pp to 10%)
- Goods trade continue strong dynamics, high importance of re-exports
- Fiscal rule (budget deficit below 3% of GDP) to be observed in 2023 and beyond
Special issues
- DCFTA. Positive impulses but only modest nominal increase
- DCFTA. Still further steps necessary to tap full potential for Georgian exports
