The COVID-19 pandemic has had a major impact on Georgia’s economy. The shock is expected to cause a contraction of 5% in GDP in 2020, one percentage point greater than projected at the time of the Sixth Review, on account of a more negative impact of the lockdown and a more protracted shock - IMF Staff led by Mercedes Vera-Martin stated in an official release which was issued after the conclusion of the virtual review mission to Georgia.
According to the IMF, end-2020 inflation is projected at 3.5%. The main reason for this is the fact that high food prices during the lockdown have been fully offset by the decline in inflation after the reopening. “Growth in credit to the private sector has remained robust, partly supported by government subsidies on Lari-denominated mortgages. Slack in demand combined with the post-lockdown recovery in supply has recently put downward pressure on inflation” – the IMF stated.
