PMC Research Centre published a report on Georgian Economic Climate. According to the document, in a survey of Georgian economists conducted in Q2 2024, the overall assessment of Georgia’s present economic situation was slightly negative. Their assessment declined compared to the previous quarter and the corresponding quarter of 2023.
In Q2 2024, the surveyed economists' predictions for Georgia’s economic situation for the end of the next six months were significantly negative. Their expectations were the most pessimistic since Q1 2021.
In addition to assessing the current economic situation and outlining their expectations for the end of the next six months, the surveyed experts also
made predictions with regard to Georgia’s main economic indicators.
• On average, the expected real GDP growth for 2024 was 5.5%.
• The inflation rate (year-on-year) is expected to increase by the end of the next six months, compared to the corresponding month of the previous year. The expected rate of inflation for 2024 was 5.0%.
• By the end of the next six months, compared to the corresponding period of the previous year, the Georgian Lari is expected to depreciate against the US Dollar and Euro, and to appreciate against the Russian Rouble and the Turkish Lira.
• The volume of both exports and imports will decrease by the end of the next six months compared to the corresponding period of 2023.
• When asked to identify the factors having the greatest impact on the Georgian economy in Q2 2024, the surveyed economists pinpointed political instability and exchange rate fluctuations. Other factors deemed by respondents to have a considerable impact in this period included a labor shortage, high rates of emigration and Russia’s ongoing war on Ukraine.
• The surveyed economists tended to perceive negative factors as more impactful (e.g. political instability and exchange rates fluctuations) than positive ones (e.g. decreasing monetary policy rate and low inflation rate)
• In april 2024, The reintroduction of the bill on "transparency of foreign influence" hinted at a possible geopolitical shift of the government of Georgia. The hearings on the draft law sparked mass protests and drew concerned reactions from the EU and the US.
• Nearly all of the surveyed economists (97%) thought that effects of the bill on Georgia’s economy would be negative or very negatively.
• In general, the surveyed economists believed that the bill would have the most negative impact on the EU accession process, FDI inflows, and currency depreciation.
• In Q2 2024, the Georgian Parliament passed the controversial "Offshore Law" offering tax benefits to individuals and companies moving assets from offshore to Georgia.
• The surveyed economists’ assessments of the “Offshore Law” were largely divided, with some economists expecting it to have no impact at all (38%), while others believe the law will have a negative or very negative effect (55%) on Georgia's economy.
• Those who assessed this law negatively, they expected its greatest impact on the reputation of Georgia’s financial system.
• In May 2024, the Ministry of Economy and Sustainable Development initiated legislative changes to the Pension Agency in the Georgian Parliament. Accordingly, the surveyed economists were asked to assess these changes.
• The increased government role in appointing board members was the change most commonly given a negative assessment (77%), while increasing the limit for investing in other assets was viewed most positively (74%).
