The World Bank projects Georgian economic growth to slow sharply this year, coming close to 0% in 2020 due to the challenging external environment and impacts of the COVID-19 pandemic.
However, the COVID-19 impacts on the Georgian economy “will be partly cushioned by a fiscal stimulus of around 2% of GDP, containing acceleration of capital spending, tax deferrals, accelerated VAT refunds and sector support for the most affected businesses, as well as higher social spending,” says the international financial institution in its Spring 2020 Economic Update for the Europe and Central Asia region.
The World Bank forecasts Georgian fiscal deficit (a shortfall in a government’s income compared with its spending) to be around 5.2% of the gross domestic product (GDP) in 2020.
“The Georgian economy will be severely impacted, as transport restrictions affect the travel and tourism sectors, while containment measures dampen domestic demand,” says the World Bank.
“The World Bank remains a strong and committed partner to Georgia, and we will support the government’s health, social protection and economic recovery responses, all of which are essential to mitigating the impacts of the pandemic on the people of Georgia,” says Sebastian Molineus, the World Bank Regional Director for the South Caucasus.
Prime Minister Giorgi Gakharia noted that the government was working to mitigate the damage caused by the virus.
“We are making changes to the budget – the government is already working on a plan to emerge from these conditions of the national curfew and the state of emergency. This plan should have a balance between the protection of citizens’ health and the potential of economic development. It cannot be done in one day or in one week,” said Gakharia.
The World Bank is allocating about $160 billion to support developing countries amid the coronavirus pandemic over the next 15 months. (Agenda/Business World Magazine)