The Georgian economy is expected to grow by 3.5% in 2021, rebounding with the gradual lifting of the coronavirus (COVID-19) pandemic restrictions and revival of domestic demand, a new Asian Development Bank (ADB) report claims.
In Asian Development Outlook (ADO) 2021, the bank’s flagship annual economic publication, ADB projected Georgia’s gross domestic product (GDP) growth to accelerate to 6% in 2022 as a full reopening of the economy and expected recovery in tourism boost travel and commerce.
“As a tourism-dependent economy, the gradual lifting of pandemic-related restrictions should revive the country’s growth this year and accelerate it in 2022,” said ADB Country Director for Georgia Shane Rosenthal. “While the vaccine rollout will be key to a fast recovery, increasing access to finance for small and medium-sized enterprises, expanding e-commerce, and transforming agriculture to boost food exports will be vital to Georgia’s long-term economic growth and the livelihoods of Georgians.”
ADB projects inflation to slow to 5.0% in 2021 and 3.5% in 2022, although this remains above the National Bank of Georgia’s inflation target of 3.0%. The current account deficit is projected to narrow to 10% of GDP in 2021 and 7% in 2022 as the merchandise trade balance and tourism gradually improve.
With extensive government support to offset food supply disruptions, agriculture is expected to grow by 3.2% in 2021 and 3.9% in 2022. Investment is projected to contract in 2021 as private investment falls by 7.5% but should expand next year.
Exports are projected to grow by 7.1% in 2021 before ramping up by 20.4% in 2022 as the global recovery strengthens, while imports are projected to expand moderately by 3.6% in 2021 and by 8.9% in 2022.
The ADB report highlighted the need for Georgia to elevate agriculture development by improving farm knowledge, connectivity, financial access, and technological capability. Establishing modern agro-processing, improving market access, and attracting private investment could foster competition and improve export potential.
“The government should also continue encouraging investment in irrigation systems to enhance productivity, improve the quality of its agricultural exports, and meet the standardization requirements of the European Union and other advanced markets,” reads the report.
ADB has supported Georgia since 2007 and is one of the country’s largest multilateral development partners. Sovereign and nonsovereign loans to Georgia total $3.5 billion. ADB’s key development priorities in Georgia include fostering inclusive and sustainable economic growth, reducing poverty, enhancing regional connectivity, and improving public service delivery.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members— 49 from the region.