The Georgian economy on a stable growth path
The Georgian economy is developing well: GDP increased by 2.7% in 2016 and is expected to grow by 4.0% in 2017. On the demand side, public investment is a key driver for growth this year. On the supply side, construction and services remain the strongest contributors to growth.
A significant increase in excise taxes at the start of this year drove up consumer prices. As a result, inflation is expected to reach an average of 6.0% this year, which is higher than the inflation target of 4.0%. However, a significant reduction of inflation is forecast for next year.Exports of goods are traditionally rather weak in Georgia, thus contributing to a large trade deficit. At the same time it should be emphasised that Georgia is a net exporter of services, especially in the tourism sector. The current account deficit will reach 13% of GDP in 2017 and continues to be financed by strong FDI inflows that amount to 11% of GDP. The budget deficit for this year is scheduled to amount to 3.7% of GDP. It foresees a major shift from current to investment expenditures, with positive long-term implications on economic growth.
