EBRD cuts 2020 GDP forecasts for Georgia, Armenia and Azerbaijan

The European Bank for Reconstruction and Development (EBRD) has cut its 2020 economic growth forecasts for Armenia, Azerbaijan and Georgia as they are hit by the coronavirus crisis, but expects a recovery in the South Caucasus countries next year, Reuters reports.

Georgia’s gross domestic product (GDP) growth is expected to fall 5.5% in 2020, before rebounding to around 5.5% in 2021, the EBRD said, adding that the economy would be severely impacted as transport restrictions hit travel and tourism.

“With tourism receipts normally amounting to nearly one-fifth of GDP, the negative impact will be widespread across many sectors,” the bank said in a regional economic prospects report.

Recovery would depend on a “gradual relaxation of domestic measures to contain the virus and a return to normality during the second half of the year”, the EBRD, which had forecast growth of 4.5% for Georgia’s GDP in November 2019, added.

For Armenia the EBRD forecast that the economy would shrink 3.5% in 2020 as a result of the combination of global uncertainty and falling demand due to the coronavirus crisis and volatility in commodity prices, but then expand by 5.5% in 2021.

It had previously forecast Armenia’s 2020 growth would be 5.0% this year, but said the economy would be affected “directly via a decrease in exports, which are dominated by copper and other mining products, and indirectly through economic links with Russia, including a likely downturn in remittances.”

GDP in oil-rich Azerbaijan is expected to contract by 5% in 2020 amid declining foreign and domestic demand, but should rebound by 3.5% next year, said the EBRD, which had previously predicted Azerbaijan’s growth would be 2.4% in 2020.