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IMF Forecasts 4% Economic Growth for Georgia

Published: June 11, 2013 | 8:35 am
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(CNA)- Provided that the political situation remains stable, business uncertainty subsides and supportive economic policies are in place, the economy should grow rapidly in the second half of this year, says the statement of the IMF mission published on June 10.
Accoring to the publication, because of the slowdown observed through the first quarter, this should result in GDP growth of 4 percent in 2013, rising back to around 6 percent from 2014 onwards. Inflation would then increase to 1½ percent at end-year and to about 5 percent by end-2014. IMF Mission says that there are upside and downside risks to the projection: on the upside, opening of the Russian market plus higher investment; on the downside, slower growth in partner countries and delays implementing the policies set out below. Provided that the authorities take the monetary and fiscal policies actions described below, plus improve clarity over their economic policies, the slowdown should prove temporary.

IMF recommends Georgian government to strengthen communication of its policy initiatives. While broadly supporting the government’s reform efforts, premature announcement of some policy initiatives before details are known, and, in the case of the newly adopted Labor Code, difficult and drawn-out consultations with key stakeholders, could have contributed to policy uncertainty. Providing detailed information about the objectives, implementation, and the timeline of new policy initiatives before announcing them to the public is needed to help restore business confidence, says the statement.

International Financial Institutions deliver the following forecast regarding Georgia’s economic growth: The European Bank of Reconstruction and Development (the EBRD)-3%, Standard & Poor’s rating agency-3.5%, ratings agency Fitch- 3%, International Monetary Fund (IMF)-4%.

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