TBILISI — The Asian Development Bank (ADB) has slashed its 2020 economic forecasts for the South Caucasus countries as they are hit by the spread of the new coronavirus, but projects a recovery in 2021.
Georgia’s gross domestic product (GDP) was expected to contract by 5% in 2020, before rebounding to grow around 5% in 2021, the ADB said in its outlook report published on Thursday.
That was down from the 4.9% growth that the bank forecast in September 2019 and 0% projected in April this year.
The Georgian government has also revised its economic outlook forecast to -4% this year from a previous growth projection of 4.5%.
Georgia’s economy contracted by 3.6% year-on-year in the first four months of 2020, compared with 4.8% growth in the same period of 2019, as measures to curb the spread of the coronavirus took their toll.
Georgian inflation was projected to slow to 5% in 2020 and 3.5% in 2021, a bit higher than the central bank’s 3% target, the ADB said.
The ADB forecasts Armenia’s economy would shrink by 3.5% in 2020 and then expand by 3.5% in 2021. The bank’s April projection was 2.2% growth for 2020.
The Armenian government expects a contraction of 2%, down from an earlier projection of 4.9% growth.
Inflation was projected at 1.2% in 2020, accelerating to 2.5% next year. Armenia, a country of around 3 million, had registered 18,698 confirmed coronavirus cases and 309 deaths as of Thursday. It is the worst-affected country in the South Caucasus region.
GDP in oil-rich Azerbaijan was expected to contract by 0.1% in 2020, partly due to weaker oil prices, said the ADB, which in September had predicted Azerbaijan’s growth would be 2.4% in 2020, but downgraded it in April to 0.5%.
Inflation was expected to decelerate slightly to 2.8% in 2020, due to sluggish economic activity, and increase to 3.5% in 2021.
(Additional reporting by Nvard Hovhannisyan in Yerevan; Editing by Alex Richardson)