Newsletter Issue No. 22 | May – June 2018

Georgia in mid-2018: positive economic trend continues

In 2017, the Georgian economy developed well. By mid-2018 we observe a continuation of this trend. GDP increased by 5.0% in 2017 and in the period of January-April 2018 growth even accelerated to 5.5%. Economic growth is broad based – whereas agricul-ture is the only exception with a decline in 2017.

Inflation now amounts to moderate 2.5%. It can be expected that the National Bank will largely meet its inflation target of 3.0% in 2018. Thus, the country enjoys price stability.

After a significant depreciation in autumn 2017, the Lari has regained value, without sizeable interven-tions by the National Bank. A flexible exchange rate is essential for stability, even though the National Bank has been repeatedly criticised for its policy.

External trade has strongly expanded in 2017 and in the period of January-May 2018, boosted by the regional economic recovery. Last but not least, the fiscal situation is stable with the budget deficit amounting to 2.9% of GDP in 2017.

Against this background, the smooth implementation of the IMF programme and the expected disburse-ment of the third tranche in June do not come as a surprise. From today’s perspective, the resignation of the government on 13 June should not affect the country’s economic outlook in a negative way.

Download Newsletter 22/2018