The World Bank has cut its 2020 economic growth forecasts for Armenia, Azerbaijan and Georgia due to the coronavirus pandemic, but it expects the three South Caucasus nations to recover next year.
“Growth in the South Caucasus is projected to decelerate to -3.1% this year as the subregion faces growth headwinds from the COVID-19 pandemic and, subsequently, low commodity prices,” the World Bank said in a global economic prospects report.
Growth is projected to pick up to 3% in 2021, it said, as the impact of shocks related to the pandemic dissipates and tourism recovers alongside improving consumer and business confidence in Armenia and Georgia.
“Activity is expected to firm in Azerbaijan in 2021 as oil prices stabilise, but the overall recovery will be muted by lingering structural rigidities,” it said.
Georgia’s gross domestic product (GDP) growth is expected to fall by 4.8% in 2020 before rebounding to around 4% in 2021, the World Bank said.
The Georgian government has also revised its economic outlook forecast to -4% this year from a previous growth projection of 4.5%.
Georgia’s economy contracted by 3.6% year-on-year in the first four months of 2020, compared with 4.8% growth in the same period of 2019, as measures to curb the spread of the coronavirus took their toll.
The World Bank forecast Armenia’s economy would shrink by 2.8% in 2020 and then expand by 4.9% in 2021.
The Armenian government expects a contraction of 2%, down from an earlier projection of 4.9% growth.
GDP in oil-rich Azerbaijan is expected to contract by 2.6% in 2020, partly due to weaker crude prices, but should rebound by 2.2% next year, said the World Bank, which had previously predicted Azerbaijan’s growth would be 2.3% in 2020.