The International Monetary Fund (IMF) has released an updated forecast World Economic Overview (WEO) - October review of the global economy, according to which the Georgian economy in Europe and the region will grow at the highest rate in 2021-2025.
IMF: In 2021-25 Georgian economy will recover at highest rate in region
By Natalia Kochiashvili
Thursday, October 15
The Ministry of Finance of Georgia informed that according to the updated forecast of the IMF, the world economy will shrink by 4.4 % in 2020, which is 0.8% less (improvement) compared to the June forecast, and economic growth in 2021 will be 5.2 % (reduced by 0.2%).
According to the updated forecast of the IMF, the Georgian economy will decrease by 5% in 2020, in 2021 the recovery will be equal to 5%; The IMF forecast for 2022 is more optimistic with 6% growth, in 2021-2025, Georgia's economic growth will average 5.5%.
IMF forecasts that in the medium term, both 2020-2025 and 2021-2025, Georgia will have, on average, the highest economic growth in Europe and the region and the Georgian economy will recover the fastest among the countries of the region in 2021-2022. According to the forecast published in April 2020, the IMF forecasted a 4% recession for Georgia this year.
For comparison, for the countries of the region, the fund predicts that in 2020 the economy in Azerbaijan will shrink by 4%, in Armenia - by 4.5 %, in Russia - by 4.1 %, in Turkey - by 5%. In 2021, the economy will grow by 2% in Azerbaijan, 3.5 %in Armenia, 2.8 %in Russia and 5% in Turkey. The IMF forecasts a 7.2% decline in the economy in the EU this year, and the forecast for economic recovery in 2021 is 4.7%. The report claims that the coronavirus pandemic will hit the Ukrainian economy hardest in the region. By 2020, Ukraine's GDP will decline by 7.2%, and in 2021, the country is projected to recover by 3%.
According to the available data, the Georgian economy shrank by 5.6% in the first 8 months of 2020, so in order for the IMF forecast to be correct, the recession in the last quarter of the year should not be more than 4%.
Like the IMF, the Georgian government expects a 5% recovery in 2021, and next year's draft budget is planned for this figure. For comparison, this is a relatively more optimistic forecast than the World Bank forecast, which expects a 4% recovery in 2021.
According to the IMF, Georgia's nominal GDP per capita in terms of purchasing power parity will exceed $ 20,000 for the first time from 2024, and $ 21,000 from 2025. In 2020-2025, Georgia ranks 11th in the world in terms of nominal purchasing power parity (PPP) growth rate per capita.
“Negotiations with international financial institutions have been successful this year, which guarantees that the country's macroeconomic stability is not in doubt,” said the Deputy Minister of Finance Nikoloz Gagua.
According to him, the reason for the economic recovery is the rather high rate of infrastructure construction this year - the projects that are important for the growth rate of the Georgian economy to continue and the maintained image of a reforming country will also contribute.