As per the Budget Code, following the delivery of macroeconomic forecasts and information concerning basic directions of Georgia's ministries by the government of Georgia to the parliament, the Parliamentary Budget Office (PBO) is publishing its independent forecasts.
Major dynamics of the forecasted variables are as follows:
- The real GDP growth forecast for 2021 (6.8%) is 0.3 percentage points (pp) higher than the government's economic growth forecast (6.5%) and differs (1.6 pp higher) from the forecast released by the PBO in December 2020. The negative effects caused by the current coronavirus (Covid-19) in the world have acquired a global scale and have affected almost all countries, including Georgia. To make predictions under the increasing uncertainty, it is necessary to make certain assumptions about the pandemic, the change of which may have a significant impact on the accuracy of the forecast. The forecast of the PBO is based on the assumption that the epidemiological situation in Georgia will improve, and the vaccination will reduce the rate of the virus spread. The assumption also takes into account the domestic economic activity of the country, as well as preliminary estimates and forecasts of economic growth of Georgia's main trading partners. It should be noted that the PBO medium run forecast (5.5%) takes into account a planned/expected major increase in government capital expenditures (non-financial assets), the factual dynamics of which might have an impact on realization of PBO forecasts
- According to PBO forecast, in 2021 the consolidated Net Lending/Borrowing (GFSM 2001) ratio to GDP will be equal to -5.8%. This differs by 1.2 pp from the Net Lending/Borrowing given in BDD (-6.9%), which is caused by differences in forecasts of consolidated budget revenues and GDP. It should be stressed, as noted above, with respect to consolidated budget expenditures, that PBO forecasts treat the BDD medium run fiscal plan as the baseline scenario.
- According to PBO forecast, the expected current account deficit amounts to 10.5% of GDP in 2021, while the government forecast equals 11.3%. After 2021, both PBO and Government project the current account balance having a rising trend (i.e. falling deficit).
For more details about updated forecasts of other economic variables, see the full document.
