According to TBC’s macroeconomic review – “Despite developments in the region – the strict fiscal policy and the negative impact of the BP project, a strong economic growth was observed in 2018.”
The bank expects high economic growth in medium term. As for the year 2019, the slowdown of lending is one of the major risks associated with the growth, although a strong fiscal stimulus is expected.
According to TBC’s forecast, with the lending rate of 15% GDP growth in 2019 will be 15%, with 12% lending rate the growth will be 4.7%.
As for GEL rate, the study notes that GEL exchange rate cycle is more closely related to Euro than USD. If Euro rates will be solid, it is likely that GEL will follow the tendency, but not for 100%.
According to study – “In the long run, the real exchange rate of GEL has a tendency to strengthen. Currently, the exchange rate indicates that GEL is over devaluated, both in relation to Euro and USD. These arguments, together with the fact that many currencies of developing countries are over devaluated in relation to USD, allows us to suggest that GEL will be strengthened both in relation to Euro and USD.
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