Georgian economy continued to deliver the highest growth rate in the region, with GDP growing by 18.0% in Jan-22 and 14.6% in Feb-22 (yielding 16.3% growth in 2M22). Part of this growth is explained by last year’s low base (when quarantine restrictions were in place), but strong growth in external inflows and domestic demand were key drivers. In Jan-Feb 2022 growth was broad-based, supported by increased activity in industry, transportation and storage, hotels and restaurants, entertainment, trade, and real estate, reads the recent publication of Galt & Taggart (G&T)on Georgian economy.
Amid high uncertainty, the reasearchers of G&T forecast "Russia-Ukraine war to slow growth to 3.0% in 2022," but the authors see also upsides to theirr growth projection.
"The COVID-related restrictions are fully lifted from 28 March, which expected to support strong growth momentum in restaurants and cafes and other parts of hospitality sector, being significantly affected by safety regulations. We also see upsides to growth from migrants and trade flows despite difficulties to quantify the extent of precise impact currently. We estimate that the influx of migrants from Russia, Belarus and Ukraine may add 0.3-0.5ppts to growth and redirection of international cargo flows through Georgia can expand GDP by another 0.7ppts, we believe. Talks on relocation of international companies to Georgia operating mostly in IT-BPO services sector is another upside to growth. This means that growth may be lifted upwards to 4.0-4.5% in 2022, from our 3.0% baseline projection," reads the research.
