16.Feb .2021 10:30

Georgia’s economy would contract by 4.1% instead of 6.1% without COVID lockdown – G&T

Georgia’s economy would contract by 4.1% instead of 6.1% without COVID lockdown – G&T
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Galt&Taggart evaluates that Georgia’s economy would contract by 4.1% instead of 6.1% without COVID lockdown.

Lasha Kavtaradze, head of Macroeconomic Analysis and Forecasting at Galt & Taggart declares that according to their basic forecast, economic growth can reach 5% in 2021 with partial recovery of tourism. However, if the tightening continues for a longer period of time, then the economy will grow by 3.6% this year.

At the same time, Galt & Taggart does not consider the possibility of another "lockdown" in its scenarios, however, according to Lasha Kavtaradze, in the case of "lockdown" the increase will be 1% less.

The Investment Bank names the resumption of tourism as a key precondition for further strengthening of GEL exchange rate.

According to the baseline scenario, prices are expected to increase by 4.5% this year, while in the case of a pessimistic scenario, the inflation rate will be 5-6%.

Consequently, if events develop in a pessimistic scenario, then an additional 1% increase of the refinancing rate in the country is not ruled out.

As for the banking sector, Galt & Taggart predicts that lending will increase by 10-12% this year, while in the case of a pessimistic scenario, the increase of loan volume will be within 5-7%.