Georgian Economy Grows by 5.7% in October

The Georgian economy saw a 5.7% increase in October. The information was released by the National Statistics Office (Geostat), which says that the real growth was registered in manufacturing, hotels and restaurants, information and communication.

Geostat’s preliminary report reads that the average estimated real GDP growth equaled 5.1% for the first ten months of 2019 year-on-year (y-o-y), adding a decrease was registered in mining and quarrying and in arts, entertainment and recreation activities.

Minister of Economy and Sustainable Development Natia Turnava says that the government spares no effort to see the highest possible growth of the Georgian economy.

“We are doing our best to achieve high economic growth in the country, but the most important thing for our people is not the growth figures themselves, but the employment and social benefits that lie ahead. Such economic growth can be achieved by the creation of new jobs, which will be seen through the privatization of the objects we recently offered to businesses,” the Minister said, while commenting on the economic growth and the list of 100 privatization objects published by the ministry two days ago.

Georgian Prime Minister Giorgi Gakharia says that the number of jobs, education, security, and rapid economic growth are important. He further noted the Georgian economy managed to grow by 5.1% in the last 10 months.

“Of course it is not enough and we need more growth...We need to help businesses to operate better, and of course our most important goal is to create strong businesses that create jobs,” he said.

Gakharia added that the government has fully realized its function to create a comfortable environment for businesses to be stronger and to create more jobs.

“The economic growth of our country depends on the private sector. A key component of our country's economic growth is private business, and the government has fully realized its function to create a comfortable environment for Georgian businesses to be stronger, create more jobs, generate more profit and be more widely represented in international markets,” he noted.

Economic expert Akaki Tsomaia believes that a 5.7% growth in the economy is “nothing special or promising.” According to him, the average economic growth has been 5% in recent years, and there is nothing unexpected in the latest figure.

“5% is the rate of economic growth that a developing country like us would have if there are no novelties and innovations in the economy. It means that nothing new is happening in the economy and it is suffering from inertia,” he said.

Tsomaia stressed that such economic growth is maintained at the expense of the state's infrastructure projects, and if not for this factor, the economic growth rate would have been much lower.

“It seems that the number of infrastructure projects has increased, but it should be noted that borrowed funds are invested in these projects,” Tsomaia added.

The future forecast sees the expert expecting economic growth to continue with inertia in 2020, however, given the tightened monetary policy, he says that Georgia's economic growth rate will be below 5% next year.

“It should also be taken into account that the inflation rate will be adjusted in the last two months of this year. I do not rule out the need to tighten the monetary policy too,” Tsomaia said.

Another economic expert, Soso Archvadze has a totally different assessment of the economic growth. According to him, in October 2019, the country's economic growth rate remained quite promising- a 5.7% pace, exceeding the 0.6 point average of 5.1 points in the first ten months of the year.

“Taking into account the external challenges and internal political situation, this indicator reaffirms the very high degree of sustainability of our country's economy to negative factors, challenges and circumstances,” the expert said.

To note, the Government of Georgia forecasted a 4.5% growth in the economy in 2019, while the European Bank for Reconstruction and Development (EBRD) left the forecast of Georgia’s economic growth for 2019 and 2020 unchanged at 4.5%.

In addition to this, the World Bank forecasts 4.6% economic growth in Georgia in 2019 while the International Monetary Fund (IMF) lowered the forecasts for Georgia’s economic growth from 4.8% to 4.3%.

By Tea Mariamidze

Image source: industrywired.com