This regional recession and really the global recession is going to have an impact on a country, an open, small, liberal open market like Georgia, and in fact, right now the economy is projected to contract here in Georgia, by some 6 percent in 2020 - World Bank Regional Director for the South Caucasus, Sebastian Molineus commented on the latest edition of the World Bank’s Economic Update for the region, released today.
According to the Update, the welfare impacts will be equally severe; as many as 160,000 Georgians could fall into poverty in 2020 and over 400,000 could suffer downward income mobility.
On the negative side, as identified by World Bank Regional Director for the South Caucasus, two main factors have the major impact on the economic performance of Georgia during the pandemic. “This is a reflection of the strong mobility restrictions that have been put in place, the subsequent job losses and the troubles and issues that firms have faced, and of course the huge impact that this has had on tourism which, prior to the pandemic, was about 8 percent of GDP, so clearly a major impact” – said Molineus.
On the positive side, World Bank Regional Director for the South Caucasus identifies a number of sound macroeconomic policies in place that have allowed the government to support households, to support firms, and to make important investments into the health sector and social protection programs that have enabled the government to buffer the shock somewhat.
“So, again – Molineus stated - we expect that if the crisis is not prolonged, if a vaccine is found, a rebound to take place here in Georgia as well, we anticipate that to take place sometime in 2021, and be somewhere along the lines of 4 percent growth. But again, there are a lot of uncertainties in this respect that we still have to monitor very carefully”.
In conclusion to his commentary, World Bank Regional Director for the South Caucasus reiterated that the World Bank has been there for the Georgian government and its people since day one of the COVID-19 pandemic, and will continue to do so through its support.
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