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Country Report Georgia March 2011
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HTMLThe domestic economy: GDP growth remains robust
According to data from the National Statistics Office, real GDP expanded by 6.7% year on year in the third quarter of 2010 (the latest data available), marking a modest slowdown from the 8.7% year-on-year growth rate recorded in the second quarter. The slowdown in the third quarter can primarily be put down to base effects. In the second quarter of 2009 real GDP contracted by a sharp 9% year on year, compared with a less steep 1.5% year-on-year contraction in the third quarter.
Over the first three quarters real GDP expanded by 6.5% year on year. Manufacturing, which accounted for just under 11% of total GDP in the first three quarters, grew by a robust 18.5% year on year in January-September. Transport recorded the second-fastest year-on-year growth over the first three quarters, of 14.8%. Construction and financial intermediation also performed strongly, expanding by 7.3% and 10.1% year on year, respectively, in January-September. However, the large agricultural sector recorded a 0.7% year-on-year contraction in the first three quarters. Given that agricultural production slows in the final quarter, the full-year figure is likely to show a steeper contraction.
| Gross domestic product by sector | |||||||||||||
| (% change, year on year; constant 2003 prices) | |||||||||||||
| 2008 | 2009 | 2010 | |||||||||||
| 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | 1 Qtr | 2 Qtr | 3 Qtr | 4 Qtr | Year | 1 Qtr | 2 Qtr | 3 Qtr | |
| Agriculture | -3.1 | 0.3 | -7.9 | -6.9 | -4.4 | -13.4 | -5.1 | -9.9 | 0.6 | -6.8 | 1.6 | -1.3 | -1.8 |
| Manufacturing | 0.3 | 7.5 | -6.8 | -4.5 | -1.5 | -7.4 | -17.9 | -2.0 | -6.6 | -8.5 | 21.8 | 16.6 | 18.3 |
| Construction | 10.9 | 0.1 | -32.4 | -8.0 | -11.1 | -14.0 | 3.5 | 10.1 | -11.3 | -3.1 | 2.1 | 12.9 | 6.5 |
| Trade | 21.2 | 12.4 | 7.3 | 8.4 | 11.8 | -16.4 | -29.0 | -12.4 | -7.8 | -16.3 | 10.8 | 13.2 | 11.7 |
| Hotels & restaurants | 7.7 | 15.5 | -6.5 | 5.6 | 4.9 | -12.2 | -13.8 | -3.9 | 10.9 | -4.4 | 7.8 | 12.4 | 15.7 |
| Transport | -0.2 | 3.4 | -21.6 | -16.9 | -9.5 | -7.4 | -9.2 | 5.1 | 13.5 | 0.5 | 14.9 | 15.7 | 13.9 |
| Communication | 18.4 | 23.5 | 18.7 | 4.8 | 15.8 | -2.0 | -4.5 | -5.1 | -1.7 | -3.4 | 6.5 | 5.7 | 2.9 |
| Financial sector | 27.0 | 29.0 | -18.7 | -18.4 | 4.3 | 3.7 | -15.6 | 9.2 | 16.6 | 1.5 | 5.2 | 13.6 | 12.2 |
| Government sector | 15.6 | 14.1 | 2.3 | 10.2 | 9.9 | -3.8 | 4.1 | 2.1 | 0.9 | 1.2 | 1.8 | 1.3 | 0.6 |
| Real GDP | 9.9 | 7.9 | -5.0 | -0.8 | 2.3 | -4.8 | -9.0 | -1.5 | 0.0 | -3.8 | 3.9 | 8.7 | 6.7 |
| Source: National Statistics Office. | |||||||||||||
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The economy has performed better than expected. The IMF has raised its real GDP estimate for 2010 to 6.3%, from an earlier forecast of 4.5%. It also raised its growth forecast for 2011 to 4.5% from 4%. This is based on expectations of higher private demand and private investment in the Georgian economy. The IMF's 2011 forecast is in line with that of the finance minister, Kakha Baindurashvili, who also predicted that the economy would expand by 4.5%.
