Asian Development Bank (ADB) forecasts 3,8% economic growth in Georgia in 2017 and up to 4,5% in 2018. Also, forecast of the government on GDP growth for the current year is 4,2% and in 2018 4,5% growth is expected.
ADB considers tax reform and increase of capital expenditure as driving forces for economic growth. Among factors, having impact on inflation, ADB names devaluation of GEL and increase of taxes.
In the long run, incompatibility of labour capacities with the market demand is considered as the factor, hindering economic growth. ADB states that unproductivity of the labour force increases business expenditures.
To reduce the “labour deficit”, ADB advises the government to offer financial and tax benefits to companies and extend staff retraining programs.
“The government should facilitate development of e-learning and introduction of advanced technologies”.
In addition, Asian Development Bank states that budget deficit may increase by more than forecasted 4,1%, unless economic growth is achieved. ADB still expects the impact of external shocks on export, money transfers and GDP growth, particularly with the background of shrinking economies of the major trade partner countries.
“Part of the ambitious plans of the government might not be fulfilled. Particularly in terms of increasing investments on local level, which the government expects in the form of so-called “Estonian model” taxes. However, reasonable monetary and fiscal policies should facilitate economic development of the country”, – states ADB in its report.
