TBILISI, DFWatch–The International Monetary Fund (IMF) has downgraded its prognosis for Georgia’s economic growth this year from 6 to 2.5 percent.

In the beginning of 2013, IMF assumed Georgia would have 6 percent growth, but then reduced the prognosis to 4 percent in June. On Thursday, the number was again reduced to 2.5 percent.

“Growth in Armenia and Georgia is expected to decelerate this year,” IMF writes. “In Georgia is expected to moderate given slower private investment, weak credit growth and budget underspending. Inflation in the region will average 6-6 ½ percent.”


IMF expects that the slowdown in economic growth may be the result of reduced private investments and credits, as well as budget cuts. This caused a stricter fiscal policy. The government must give priority to productive spending in order to support demands, the IMF writes.

“In Georgia this year’s policy rate cuts should help reduce deflationary pressures, although resolution of recent political uncertainty is needed to restore investor confidence,” the report reads.

According to the IMF, the prognosis for Georgia’s economic growth will reach 5 percent next year. This rate is also reflected in the draft of the 2014 budget.

Full report: http://www.imf.org/external/pubs/ft/weo/2013/02/pdf/text.pdf