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According to Geostat’s rapid estimates, real GDP increased by 4.9% in February. This comes as welcome news after several consecutive months of low and, at times (November 2014), negative growth. ISET’s GDP forecast predicts 0.5% GDP growth in the first quarter of 2015. However, this is likely an underestimation of the true outcome, as the economy has already partially adjusted to the external shocks that were the main drivers of the slowdown. During the reporting month, VAT payers’ turnover, which is the basis for rapid GDP estimates, increased by 13% in annual terms.
The growth of the economy has not yet been reflected in consumers’ perceptions. In February, the Consumer Confidence Index (CCI) decreased significantly, mainly because of lari depreciation and high inflation expectations. The CCI continued its downward trend in March, but the decline was minor compared to the magnitude of the fall reported in February. Moreover, consumers’ expectations improved for the first time in four months. Download the full report
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The economic slowdown of the closing months of 2014 continued in January 2015, with the growth of real GDP amounting to only 0.5%. ISET‐PI’s GDP forecast is not optimistic either, with GDP growth in the first quarter of 2015 expected to be 0.5% (see GDP Forecast). The 5% economic growth initially forecasted by the government of Georgia, the 5.5% predicted by the ADB and the 4.2% predicted by the EBRD in September 2014 each seem quite out of reach now. In early March, the IMF mission lowered its forecast to 2%.
Consumer sentiment, as measured by the Consumer Confidence Index (CCI), has been decreasing over recent months and the index dropped to a new historical minimum in February. Consumers seem to be concerned about inflation linked to the depreciation of the Georgian lari against the US dollar. Download the full report
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