As per the Budget Code, following the delivery of macroeconomic forecasts and information presented inthe draft law of Georgia on the State Budget for 2021 (Revised Version), concerning 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 2021 growth forecast (5.4%) is by 0.4 percentage points (pp) higher compared to the government forecast (5.0%) and differs by 0.1 pp from the PBO forecast of October 2020 . As it is known, the negative consequences caused by the new Coronavirus (Covid-19) in the world have affected almost all countries, including Georgia. A significant decline in the economy was observed in the first half of 2020, slowdown of decline rate is expected in the third and fourth quarters compared to the second quarter, however the PBO forecasts significant decline of real GDP in 2020. Regarding 2021, amid increased uncertainty, along with an analysis of fundamental economic developments for forecasting, it is necessary to have some assumptions about the pandemic, the change of which could significantly affect the accuracy of the forecast. The mentioned forecast of the PBO is based on the assumption that the spread of the virus in Georgia, so-called the "second wave", will not cause significant restrictions in the fourth quarter of 2020 and from the first quarter of 2021, the Georgian economy will begin to recover faster than the rest of the world. The assumption also takes into account the country's domestic economic activity, as well as - preliminary estimates and forecasts of economic growth of Georgia's main trading partner countries. It should be noted that the PBO medium run forecast (5.3%) 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 2021the consolidated Net Lending/Borrowing (GFSM 2014) ratio to GDP will be equal to -4.7%. This differs by 0.2 pp from the Net Lending/Borrowing given in BDD (-4.9%), 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 9.7% of GDP in 2021, while the government forecast equals 5.2%. The PBO estimates that the current account balance will improve from 2022 and will be on average of -7.2% of GDP, while the government forecasts that after the improvement in 2021 the deficit will deteriorate slightly in medium run.

For more details about updated forecasts of other economic variables, see the full document.