TBILISI, April 3 (Reuters) – The Asian Development Bank (ADB) has slashed its 2020 economic growth forecasts for the South Caucasus countries as they are hit by the spread of the new coronavirus, but projected a recovery in 2021.
Georgia’s gross domestic product growth is expected to decline to 0% in 2020 as the impact of COVID-19 and lower oil prices constrain consumption and limit expansion in tourism and trade, the bank said in its outlook report published on Friday.
That was down from the 4.9% the bank forecast in September.
The bank forecast, though, that the former Soviet nation’s economy would bounce back and register 4.5% growth in 2021.
The Georgian government has taken measures to soften the economic shock of the virus in the country of 3.7 million people, which has reported 148 cases but no deaths. They include imposing a moratorium on collecting property and income taxes in the hospitality sector, easing bank lending regulations, and increasing spending on infrastructure.
Georgian inflation is projected to slow to 4.5% in 2020 and 3.0% in 2021, in line with the central bank’s target, as a result of the introduction of administered prices on food.
The ADB forecasts growth in neighbouring Armenia will slow to 2.2% in 2020, but will expand by 4.5% in 2021 “as reforms initiated in 2019 and 2020 take hold and improve infrastructure, human capital, finance, and public administration”.
Inflation is projected to accelerate slightly to 2.8% in 2020 and slow to 2.2% next year. The country of around 3 million had reported 736 cases of the virus by Friday, the highest number in the South Caucasus region. Seven people have died.
Growth in oil-rich Azerbaijan is meanwhile expected to slow to 0.5% in 2020 but rebound to 1.5% next year. The nation of about 10 million people has reported 443 cases of the coronavirus with five deaths.
Inflation is expected to decelerate slightly to 2.5% in 2020, due to sluggish economic activity, and increase to 3.5% in 2021.
In September, the ADB had forecast that Armenia’s 2020 growth would be 4.5% and Azerbaijan’s 2.4%. (Reporting by Margarita Antidze; Editing by Pravin Char)
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