TBILISI (Reuters) – The World Bank has slashed its 2020 economic growth forecasts for the South Caucasus countries Armenia, Azerbaijan and Georgia as they are hit by the spread of the new coronavirus, but projected a recovery in 2021.
Georgia’s gross domestic product (GDP) growth is expected to slow to around 0.1% in 2020, before seeing a rebound to around 4% in 2021.
The bank said the Georgian economy would be severely impacted as transport restrictions affect the travel and tourism sectors while containment measures dampen domestic demand, partly offset by a fiscal stimulus of around 2% of GDP.
It had forecast growth of 5% in October 2019.
For Armenia the World Bank forecast growth would slow to 1.7% in 2020, or a quarter of the average rate seen over the past three years, but said it was an optimistic scenario.
It said the deceleration was expected to be cushioned by fiscal expansion, both by increased current spending, particularly in health and social spending, as well as support to businesses and higher public investment.
It expects Armenia’s economy to expand by 4.5% in 2021.
GDP in oil-rich Azerbaijan is meanwhile expected to contract by 0.2% in 2020 but should rebound by 2.2% next year.
“Non-energy growth will be affected by deteriorating consumer confidence and plummeting receipts from tourism, trade, and hospitality, but partially cushioned by recent government
support policies,” the World Bank said.
The bank previously forecast Armenia’s 2020 growth would be 5.1% and Azerbaijan’s 2.3%.
Reporting by Margarita Antidze and Nvard Hovhannisyan; Editing by David Holmes