The former Soviet republic of Georgia is showing a “decent” rate of recovery from the economic crisis caused by Covid-19 despite a significant decline in tourism, one of its main industries, according to analysts at investment bank Renaissance Capital.
RenCap economists Sofya Donets and Andrei Melaschenko say in a report they expect the 2020 gross domestic product (GDP) of the Caucasus nation of four million to be 5.8 per cent down on last year.
For comparison’s sake, the European Commission forecast in July that Italy and Greece, which are also heavily dependent on tourism, would show year-on-year GDP contractions of nearly twice as many percentage points.
Donets and Melaschenko project 6.1 per cent year-on-year growth for Georgia’s GDP in 2021 due to dynamics of sectors other than tourism, domestic political continuity and a potential rapprochement with Russia.
Georgia cut off diplomatic relations with Russia in August 2008 after Moscow recognised the independence of the breakaway Georgian regions of Abkhazia and South Ossetia.
The European Commission, in the same forecasts of July, predicted that the GDP of Italy would grow by 6.1 percent and that of Greece by 6.0 per cent year on year in 2021.
Donets and Melaschenko argue that Georgia’s currency, the lari, will most likely have a larger appreciation potential than the currency of any member of the Commonwealth of Independent States.
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