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Sebastian Staske

Partial recovery in tourism drives strong growth

Georgia’s economy grew strongly by 10.6% in 2021. The pre-crisis level was exceeded. Growth was driven by all components. GDP growth of 5.5% is forecast for 2022. Tourism remains a crucial factor in the recovery, with revenues from the sector at 38% of 2019 levels in 2021 and expected to reach 75-85% in 2022.

  • Georgia
NL 44 | January - February 2022
Macroeconomic Analyses and Forecasting

The Lari has appreciated to around 3 GEL/USD. FX interventions have declined. However, inflation was very high at 13.9% at year-end 2021. The National Bank therefore raised its policy rate four times to 10.5%.

Fiscal consolidation has started, the deficit has been reduced to 6.7% of GDP in 2021. A further decline to 4.4% in 2022 and 3.0% in 2023 (compliance with the fiscal rule) is expected. The debt ratio fell to around 50% in 2021 and will remain stable at about this level.

Downside risks to growth remain in the tourism sector due to the pandemic. Furthermore, the significant exposure vis-à-vis Russia and Ukraine poses an additional potential challenge.

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