Despite the difficulties caused by the ongoing war in Ukraine, there are signs of stability in the country's economy

Despite the difficulties caused by the ongoing war in Ukraine, there are signs of stability in the country's economy – ISET

14/10/2022

14:06

Economic

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Despite the difficulties caused by the ongoing war in Ukraine, in the 2nd quarter of 2022, there are signs of stability in the Georgian economy. The forecast of the ISET Research Institute shows that the GDP growth rate by 2022 will be 13.8% per annum. According to the ISET data, the economic growth will have a positive impact on inflation, which has already reached double digits and amounted to 10.9% annually in August 2022 (GEOSTAT, September 2022).

After an expected recovery in 2021, global economic conditions worsened significantly in 2022 (IMF, July 2022). On February 24, 2022, Russia's invasion of Ukraine caused the global economic growth to decline for the first time since 2020.

According to the latest estimate of gross domestic product (GDP) growth by the Georgian National Statistics Office, due to high consumer demand, Georgia's economic growth rate was 7.1% in the 2nd quarter of 2022 (the National Bank of Georgia, August 2022). This may be due, in part, to the increased influx of Russian citizens into Georgia since the start of the Russia-Ukraine war and the unprecedented amount of remittances from Russia (e.g., the inflow rate from Russia in the first seven months of 2022 is seven times higher than the inflow rate in the same period of 2021).

Due to the improvement of the external sector and high credit activity, the National Bank's forecasted real GDP growth rate has been adjusted from 4.5% to 9% (the NBG, May 2022),” – the ISET said.

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