Country Economic Forecasts > Georgia

GDP growth picked up to 3.1% in Q2 while inflation fell below 2%, averting any need for further monetary tightening despite last year's widening of the fiscal deficit towards 4% of GDP. Although some slowdown is likely ahead of elections on 8 October, the outlook remains for a quickening of growth to 4.5-5% a year in 2017-19, driven by exports, stronger private investment and still-resilient consumption as remittances revive. With relative cost gains from GEL depreciation preserved, rising net exports ensure a gradual decline in the current account deficit from over 12% of GDP in 2014 and 2015.While the 2015 FDI downturn was largely reversed in H1 this year, pre-election uncertainty has delayed the revival of domestic investment, with the coalition still not assured of retaining power despite improving economic prospects. Opposition parties remain divided, but may cite disruptions in their campaigns to challenge the fairness of the poll, which could also see a swing to newly-formed protest movements. However, the structural changes underlying faster growth are resilient to political turbulence, and a consensus behind an expanding, less regulated private sector is likely to remain.