GDP Forcast

Details: Created: 24 May 2021

ISET-PI has updated its real GDP growth forecast for the second and third quarters of 2021. Here are the highlights of this month’s release:

Geostat has released its GDP growth estimate for the first quarter of 2021. The Q1 growth stands at -4.2%, which is 1.2 percentage points above the recent ISET-PI forecast.

ISET-PI’s forecast of real GDP growth for the second quarter of 2021 stands at 12.2% -up from 11% in April. The third-quarter growth forecast currently stands at 3.3%.

Notably, our econometric model depends only on the retrospective information (past observations), thus, an abnormally large negative growth of the real GDP during the second wave of strict government restrictions causes overestimation of the contraction in the first quarter and growth in the second quarter of 2021.

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Details: Created: 17 March 2021

ISET-PI has updated its real GDP growth forecast for the first and second quarters of 2021. Here are the highlights of this month’s release:

The real GDP growth rate amounted to -11.5% year-on-year for January 2021.

As a result of the update, the growth forecast for Q1 of 2021 remained unchanged, at -5.4%. ISET-PI’s second forecast for Q2 of 2021 puts GDP growth at positive 11%.

Since Q2 2021 growth rate is relative to the same quarter of the previous year, the unusually high 11% growth rate is in part due to the pandemic-driven collapse of GDP observed in Q2 2020 (negative 13.2%). Thus, our forecast model “expects” the bounce back recovery of real GDP relative to last year.

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Details: Created: 15 February 2021

ISET-PI has updated its real GDP growth forecast for the first quarter of 2021. Here are the highlights of this month’s release:

Geostat has published its rapid estimate of real GDP growth for the fourth quarter of 2020, and their estimated growth stands at -6.5%, which is 1.3 percentage points below the ISET-PI’s most recent forecast.

The annual real GDP growth in 2020 amounted to -6.1%, which is 0.6 percentage point lower than our recent prediction. Economic activity fell sharply due to global pandemic, although the decline was mitigated by the relatively strong fiscal stimulus and lending.

Thus, the growth forecast for Q1 of 2021 was revised downward to -5.4% from -3.5% in January.

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GDP Forecast Methodology

The Georgian Index of Leading Economic Indicators provides current-quarter and one-quarter-ahead GDP forecasts for those who need to make business and policy decisions and cannot wait until the official statistics are announced several months later. According to methodology, our forecast is similar to those conducted by leading research institutes around the world. In particular, ISET-PI adapted the methodology that was originally developed by the New Economic School to forecast GDP for the Russian Federation. We would like to acknowledge the help of Prof. Konstantin Styrin (NES) who agreed to share his MATLAB code with ISET-PI, and the assistance of Dr. Andrei Sarychev in modifying and adapting the code for Georgia‘s needs.