Deposit Dollarization Dampens Growth Forecast

Details: Created: 30 October 2015

ISET-PI has updated its forecasts for Georgia’s real GDP growth rates using the August 2015 releases of various economic indicators.
• The final growth forecast for the third quarter of 2015 has not changed significantly since last month (declining by only 0.02%) and remains at 2.6%.
• Similarly, the second growth forecast for the fourth quarter of 2015 is still 3.8%.
• Based on our forecast, the annual growth for 2015 is expected to be 2.9%.

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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.