TBILISI (Reuters) – 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.
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 3% in 2020 amid declining foreign and domestic demand, but should rebound by 3% next year, said the EBRD, which had previously predicted Azerbaijan’s growth would be 2.4% in 2020.
(This story corrects growth estimates for Azerbaijan in final paragraph.)
(Writing by Margarita Antidze; Editing by Alexander Smith)