Unprecedented recession: Georgian economy suffers steepest decline since 1994
The National Statistics Office of Georgia has released estimates on how much Georgia’s economy contracted in 2020. As per the Geostat findings, Georgia’s economy declined by 6.1%, which is a record figure over the past 26 years.
The recession in 2020 was greater than in 2008 – a year that was largely characterized by the global economic crisis and the August war with Russia.
The main reason for the recession is the outbreak of a global pandemic and the months of isolation that followed it. Strict restrictions, reintroduced in Georgia on November 28, are still in effect and thousands of business establishments remain closed.
Geostat also noted that December was the most difficult month for the Georgian economy in 2020 as that was when the country was completely closed due to the deterioration of the epidemiological situation.
In December, amidst the New Year festivities, sales, and other economic activities usually peak, however, in 2020, December saw a complete stagnation of most economic activity in the country.
“Georgia’s economy contracted by 7.9% in December, leading to an even larger annual fall than predicted”, said Geostat CEO Gogita Todradze at a special briefing.
Business Media Georgia noted that Georgia’s economy has been growing steadily every year since 1994, with the exception of 2009 when in the aftermath of the Russian-Georgian war the economy contracted by 3.65%. In comparison, the Georgian economy increased by an average of 4.17% per year between 2014-2019.
From an economic point of view, 2020 has become an unprecedented year for the entire world. As per the preliminary estimates of the International Monetary Fund, the world economy fell 4.3% last year.
Quarterly data on Georgia’s economic growth in 2020 described the following:
1st quarter – an increase of 2.3%;
2nd quarter – a decrease of 13.2%;
3rd quarter – a decrease of 5.6%;
4th quarter – a decrease of 6.5%.
While commenting on Geostat’s data, Minister of Economy Natia Turnava noted that “in the end, the result was worse than we originally predicted”.
“We achieved a very promising and impressive recovery rate in September-October, especially compared to the other countries in the world. However, during the last quarter, a so-called second wave occurred and affected an entire European Union, our region in general, and Georgia in specific”, said Natia Turnava.
Roman Gotsiridze, member of the opposition United National Movement party, commented on the economic downturn, saying he believes that the situation is even more dramatic, and Geostat has “embellished” the data.
“The decline is even greater as the gross domestic product is not calculated accurately. The reason for this is the rigged annual inflation rate (due to manipulation of subsidies). Geostat is notorious for political manipulation and often embellishes government activities”, Gotsiridze said.