Georgian Economic Climate (Q4, 2019) Prepared by PMC Research & ifo Institute

Georgian Economic Climate is a joint product of PMC Research Center and the ifo Institute for Economic Research. In this bulletin, we discuss Georgia’s economic climate as assessed by Georgian economists. PMC Research Center is a regional partner of the ifo Institute, one of the leading economic research institutes in Europe, specializing in applied economic research, policy advising and other services for governments, businesses, researchers and the public. The ifo Institute publishes the World Economic Survey (WES) on a quarterly basis, accurately presenting the current economic situation and forecasts for industrial, emerging and developing economies. 30 experts are participating in this initiative from Georgia. The survey was conducted in October 2019, assessing October 2019 - March 2020 period.

In the fourth quarter of 2019, the Georgian economic climate has slightly worsened.

In this period, Georgian economists assessed Georgia’s present economic situation positively; moreover, the assessment of the present economic situation in this quarter has improved compared to the third quarter of 2019 and the fourth quarter of 2018.

In the fourth quarter of 2019, Georgia’s economic situation in the next six months has been assessed negatively by Georgian economists. In this quarter, expectations in six months has deteriorated rapidly compared with both, Q3 of 2019 and Q4 of 2018.

In addition, experts predict Georgia’s main economic indicators. According to the results, in the fourth quarter of 2019, the expected real GDP growth for Q4 of 2019 is 4.7%. Other main economic indicators are forecasted as follows:

• The inflation rate is expected to increase in the next six months, on a year-on-year basis;

• The Georgian Lari is currently undervalued against the US Dollar and the Euro, about the same against the British pound, and overvalued against the Yen.

• The export volume is expected to increase in the coming six months;

• The import volume is expected to remain about the same in the coming six months;

• The export volume is expected to increase more than the import volume, resulting in an improved trade balance in the next six months.