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Sebastian Staske

Return to growth path after crisis year

After last year’s economic slump caused by the Corona pandemic, the Georgian economy is recovering this year. The main driver of growth is consumption.

  • Georgia
Nr. 41 | July-August 2021
Macroeconomic Analyses and Forecasting

After last year’s economic slowdown, Georgia is returning to growth. The economy is expected to grow by 3.5% this year, mainly driven by consumer spending. The lari has stabilised at around 3.30 GEL/USD after high volatility and a 14% depreciation against the US dollar last year. The National Bank (NBG) continues to intervene in the foreign exchange market and has raised the key interest rate to 9.5% to prevent rising inflation expectations. The budget deficit shrinks only slightly to 7.4% of GDP, also due to the continuation of stimulus programmes. The IMF programme was recently completed, a follow-up programme is still under discussion. The successful placement of a Eurobond (USD 500 million) is evidence of investor confidence. The current account deficit (10.9% of GDP) is driven by weak tourism. As the crisis subsides, a normalisation is expected with economic growth of 5.8% in 2022.

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