The International Monetary Fund (IMF) has released a concluding statement that describes the preliminary findings of IMF staff at the end of an official visit to Georgia. According to the IMF staff, the Covid-19 pandemic has heavily influenced Georgia’s economy, however, as they state, supporting measures have helped protect vulnerable households and businesses and “the economic recovery has gained impressive momentum”. As the statement reads, the cautious supervisory approach of the National Bank of Georgia against the COVID-19 crisis and its decisive actions afterwards contributed to the resilience of the financial sector.
Georgia’s economic recovery has recently gained impressive momentum, IMF’s Staff state
By Khatia Bzhalava
Tuesday, July 20
As it is noted in the statement, covid restrictions imposed in the country and a slowdown in tourism led to economic shrinkage by 6.2 per cent in 2020 and 4.5 per cent in the first quarter of 2021, the lowest rate observed since 1991. The IMF staff notes that with the donor support, local authorities responded appropriately in terms of strengthening healthcare and providing substantial assistance to vulnerable households and businesses.
The statement reads that economic growth in 2021 is expected to reach 7.7 per cent.
“Robust growth in remittances and exports, and early signs of a faster than expected rebound in tourism have supported the recovery and should contribute to a narrowing of the current account deficit compared to its elevated 2020 level,” IMF staff notes, adding that High inflation is expected through the end of the year, before declining rapidly in 2022 as these temporary effects fade.
It is also stressed that the vaccination process needs to accelerate in order to vaccinate more than half of the population by the end of the year. The new COVID-19 strains or vaccination delays could hamper the economic recovery by requiring new lockdowns and reducing external demand.
According to the statement, the renewal of structural reforms is crucial to enhancing economic growth and making it more inclusive. The IMF staff state that unemployment, which is a long-term challenge of Georgia, has been further aggravated by the impact of COVID-19 and believe that education and vocational training should improve to help address skills mismatches in the labour market. The statement also reads that the judiciary reform will be an important step to further strengthen the business environment.
“The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board.”