According to the forecast made by National Bank of Georgia, as from 2018, the target inflation rate will drop to 3% and during the following years mid-term target rate will remain at the level of 3%.
According to calculations made by NBG, target inflation rate was determined as 3% and accordingly implementation of monetary policy targeted at this level of inflation will facilitate reduction of inflation expectations in future and retention of macroeconomic stability in general. Besides, National Bank explains that common demand also pushes towards reduction of inflation, since economic activities, although improved, are still lagging behind its potential level.
“According to the forecast, actual GDP growth will be within the limits of 4% in 2017 and 4,5% – in 2018. However, according to the same forecast, compared to the previous period, impact of negative risk factors influencing economic growth has reduced and if the current trend of improvement of external factors is retained, GDP growth in 2017 may well exceed 4%. Activation of infrastructural projects and planned fiscal stimulus will facilitate investments and consumption in general. Besides, it is expected that with the background of neutralization of difficulties existing in foreign sector, situation with export will improve and positively contribute to GDP growth in 2017”, – state representatives of National Bank of Georgia. Among the GDP risks, the leading position is still held by foreign sector. According to the information provided by NBG, complicated economic situation with the background of geopolitical tension in trade partner states will also influence Georgia. On the other hand, if improvement of enjoying free trade opportunities with Europe or speeding up of investment projects and business mood exceeds expectations, by NBG forecast, GDP growth will be higher than forecasted.
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