Return to growth path after crisis year
After last year’s economic downturn, Georgia is returning to the growth path. 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 its policy rate to 9.5% to prevent rising inflation expectations.
The budget deficit is shrinking only slightly to 7.4% of GDP, partly due to the continuation of economic stimulus programs. The IMF programme was recently completed, and a follow-up programme is still under discussion. The successful placement of a Eurobond (USD 500 m) is evidence of investor confidence.
The current account deficit (10.9% of GDP) is driven by weak tourism. As the crisis subsides, the economy is expected to return to normal with a growth rate of 5.8% in 2022.