The National Statistics Office (Geostat) released preliminary estimates on June 30. According to the data, Georgian economy grew by 25.8% in May. In 5 months, the growth rate of the Georgian economy of January-May is 11.5%. The main driver of such high growth was the economic growth of 44.8% in April and 25.8% in May.
Geostat: Georgian economy grew by 11.5% in 2021
By Natalia Kochiashvili
Thursday, July 1
Such a high growth rate observed in May is primarily due to the baseline effect of 2020. Due to severe economic constraints imposed by the pandemic in May last year, the economy shrank by 13.5% year-on-year. For comparison, in the first 5 months of 2020, instead of economic growth in Georgia, there was a 5.4% decline. However, in May of this year, the real GDP grew by 8.8% compared to May 2019.
As for the 5-month data, the calculation of the real economic growth rate shows that in the first 5 months of 2021, the size of Georgia's GDP has increased not only - compared to 2020, but also compared to 2019, and this increase is 6.1%.
According to Geostatís report, in May 2021, an upward trend compared to the corresponding period of the previous year was revealed in almost all sectors, while the most significant contributions to the GDP increase came from manufacturing, financial and insurance activities, trade, real estate, hotels and restaurants, construction, transportation and warehousing.
The report shows that in May, the turnover of VAT-paying enterprises increased by 50.3% compared to the previous year and amounted to ?8.2 billion. Economic growth was also positively impacted by exports that increased by 24.4%.
This 5 month figure might be more accurate in the future, as the report published by Geostat on June 30 is a pre-adjusted report for the second quarter of 2021 to be published in a few months. One of the main factors that could reduce the resulting 11.5% increase is the adjustment of the deflator and specific sector turnover rates. Nevertheless, it is likely that the fact that the volume of the economy measured at constant prices will exceed the 2019 rate will remain unchanged and in 2021, Georgia is likely to have higher-than-expected economic growth.
In early June, it became known that the Georgian government had raised its 2021 economic growth forecast to 6.5%. The World Bank also revised its forecast to 6%.
"The 25.8% growth recorded in May indicates that the dynamics of economic growth is moving towards a positive scenario, which implies double-digit annual economic growth," said Finance Minister Lasha Khutsishvili in his assessment of economic growth in May. As he noted, it is important that the increase is observed compared to the same period in 2019.
Based on the economic activities recorded in May, the Ministry of Finance will revise the annual economic growth forecasts, which will already be reflected in the revised version of the draft budget, which will be submitted to the Parliament of Georgia for consideration in the near future.