A reduction in budget spending, and low private investment attributable to political uncertainty, slowed growth to an estimated 3.2% in 2013, while the current account deficit narrowed substantially to about 6% of gross domestic product (GDP). Greater political stability, better trade links, reforms to boost competitiveness, and improved investor sentiment are expected to raise growth to 5.5% in 2014 and 6.0% in 2015, though the current account deficit will likely widen.
Growth slowed to an estimated 3.2% in 2013 from 6.2% in 2012. On the demand side, a 16.7% decline in public investment offset improvement in net foreign trade and services. Public investment declined because of audits of ongoing projects, while private investment fell because of political uncertainty. The drop in investment reduced construction by 10.6% (versus 13.6% growth in 2012), slowed manufacturing growth to 8.4% from 13.6% in 2012, and cut growth in industry overall to 1.9% from 9.5%. Partly offsetting these steep slowdowns were 9.8% growth in agriculture, reversing a 3.7% decline in 2012, and 3.1% growth in services, down from 6.2% in 2012, as domestic trade, financial intermediation, and tourism all expanded by less than in the previous year. Growth accelerated toward the end of 2013, reflecting greater political certainty and increased public investment.
|Selected Economic Indicators (%) - Georgia||2014||2015|
|Current Account Balance (share of GDP)||-8.0||-7.5|
Source: ADB estimates.
Growth is expected to accelerate to 5.5% in 2014 and 6.0% in 2015, reflecting higher public investment and improved investor sentiment. Anticipated improvements in the external environment, coupled with rising consumer confidence, should also support growth. Reduced political uncertainty will help revitalize the banking sector and credit activity, aiding growth.
Industry is projected to expand by 5.8% in 2014 and 6.5% in 2015, reflecting improved investor sentiment, while rising income is forecast to boost services by 5.1% in 2014 and 5.5% in 2015. Barring adverse weather, agriculture is expected to expand further by at least 7.0%in 2014 and in 2015 as the government continues to promote higherproductivity and technological advancement.
Source: ADB. 2014. Asian Development Outlook 2014. Manila.