The Georgian economy is expected to slow in 2023 with fewer migrants from the Russian Federation and receding financial inflows, before recovering slightly in 2024, reads a new Asian Development Bank (ADB) report.
Gross domestic product (GDP) in Georgia is forecast to be 4.5% in 2023, according to the Asian Development Outlook (ADO) April 2023, the bank’s annual economic publication released today. Growth is expected to accelerate to 5% in 2024 driven by continued gains in services.
“Having benefited from double-digit growth last year, Georgia must now seek ways to secure more sustainable development,” said Officer-in-Charge of ADB’s Resident Mission in Georgia Kamel Bouhmad. “To strengthen its position in tourism and services and maintain steady progress in building out key infrastructure, Georgia would benefit from increasing renewable energy production, continuing to support innovation, and accelerating environmental policy action.”
According to ADB, at almost 12% in 2022, inflation is expected to halve to 6% in 2023 before reducing further to 4% next year, approaching the central bank’s 3% target. This is mainly due to tight monetary policy, weaker domestic demand, and improved supply chains. Investment is projected to expand by 5.5% in 2023 and 3.5% in 2024 as business confidence continues to improve. The budget deficit is projected to decline to the equivalent of 2.7% of GDP in 2023 and 2.5% in 2024.
According to ADO April 2023, the current account deficit is forecast to widen to 5% of GDP in 2023 and 6% in 2024 as the trade deficit deepens. Export growth is expected to decelerate to 10.7%, and then edge up to 11.2% in 2024. Money transfers are forecast to fall to $2.5 billion per year as external inflows from migrants moderate, possibly creating exchange rate pressure.
“Amid the global climate agenda, Georgia has worked to reduce emissions through recycling and improved waste management, strengthen forest management in support of a clean ecosystem, and promote green tourism. The country can further benefit from decarbonization by trading emissions through global markets to incentivize efficient energy use and increase revenue for low-emitting firms.
To preserve biodiversity for sustainable eco- and agri-tourism, ADO April 2023 calls for Georgia to further strengthen its environmental policies. Tax incentives can promote green growth by introducing climate-smart technologies in agriculture while policies can encourage the shift to greener transport alternatives. Engaging the private sector can also help ensure greener and more sustainable private sector development in the country,” reads the press release.