According to a recent World Bank economic update on Europe and Central Asia, Georgia’s economy is projected to contract by 6% in 2020 primarily due to COVID-19-related restrictions on mobility, disruption of tourism and collapse in external demand.
The shock stemming from the contraction will be accompanied by significant welfare impacts, the World Bank noted.
Noting that “a dollarized economy adds to the challenges of managing the
shock,” it estimated a 2.8% increase in poverty (using the USD 3.20 PPP 2011 international poverty line), which translates into as many as 160,000 Georgians ending up impoverished. 400,000 Georgians could potentially experience downward mobility, the Bank warned.
Based on the report, the speed of economic recovery following 2020 hinges on the “duration of the pandemic, the availability and distribution of a vaccine and restoration of international trade and investment flows.”
Should the second wave of infections be avoided, Georgia’s growth would recover to 4% in 2021, and 6% in 2022, the World Bank estimated. Even under this scenario, WB maintained, real GDP would be around 10% lower in 2022 than projected pre-COVID-19.