According to the World Bank’s recent report Global Economic Prospects 2020, the growth in the South Caucasus is projected to decelerate to -3.1 percent this year as the subregion faces growth headwinds from the COVID-19 pandemic and, subsequently, low commodity prices.
However, activity is projected to pick up to 3 percent in 2021, as the impact of shocks related to the COVID-19 pandemic dissipates and tourism recovers alongside improving consumer and business confidence in Armenia and Georgia. Activity is expected to firm in Azerbaijan in 2021 as oil prices stabilize, but the overall recovery will be muted by lingering structural rigidities.
Overall tourist arrivals have collapsed in the Europe and Central Asia region, but the impacts may be felt most strongly in countries such as Georgia, where tourism accounts for a sizable share of GDP.
In Georgia, according to the report, the real GDP decline in 2020 is estimated to be -4.8 percent, with projected recovery of growth at 4.0 percent in 2021.
The report also cites Georgia’s announced fiscal measures that are equivalent to 3 percent of GDP over the next few years, which include additional health spending, support for the tourism sector, accelerated and increased VAT refunds, a moratorium on tax payments for low-income earners, subsidized utility costs of the poor, and unemployment subsidies.