2013年-世界发展银行全球_Georgia_Economic_Report_October_2013___Seeking_Effective_Policies_36页_859kb

Summary of Georgia Economic Report No.4 (October 2013)

Core Content

This report provides an overview of Georgia's economic and political developments in 2013, focusing on growth, inflation, external accounts, employment, poverty, and structural policies. It highlights the impact of political uncertainty and policy changes on economic performance and outlines the Government's priorities for the future.

Main Political Developments

• The ruling Georgian Dream (GD) coalition has strengthened its position in parliament and local self-governance bodies.
• Political tensions have eased somewhat, but the pre-presidential election period is expected to continue creating uncertainty.
• The presidential elections in October 2013 are seen as a key moment for economic recovery, alongside the new Constitution.
• Mr. Margvelashvili is the leading candidate for the GD, while Mr. Bakradze from the opposition UNM is a potential rival.
• The relationship with Russia has improved, with Russian tourism spending doubling and Georgian wine entering the Russian market again.
• The administrative border with South Ossetia was adjusted, which may affect the geopolitical dynamics.

Recent Economic Developments

Economic Growth

• Real GDP growth slowed to 1.9% in the first half of 2013 from 7.5% in the first half of 2012.
• The slowdown was driven by lower public investment, uncertainty over policy changes, and weak demand in the Eurozone.
• Consumer confidence showed slight recovery in Q3 2013, supported by lower lending rates and increased retail borrowing.
• The trade balance improved due to declining imports, particularly of investment goods and commodities.

Inflation

• Overall prices continued to decline, with a 1% drop in consumer prices during the first eight months of 2013.
• Seasonally adjusted inflation also declined, remaining below the NBG's medium-term target of 6%.
• Deflation was primarily driven by falling food and fuel prices, reduced administered prices, and lower electricity tariffs.
• Health-related services were the only category showing price increases.

External Accounts

• The current account deficit fell to 5.7% of GDP in the first half of 2013 from 13.4% a year ago, mainly due to lower imports.
• FDI continued to finance the current account deficit, though the report notes this may not be sustainable in the long term.
• Exports grew by 8%, while imports declined by 19%, leading to a significant improvement in the trade balance.
• The services balance improved by 35%, driven by tourism and business services, but the transport services balance deteriorated.
• Net FDI remained stable, and the current account gap was still financed by FDI despite a slight decline in inflows.

Employment and Labor Markets

• The formal business sector showed minimal hiring growth (0.1% yoy) in the first half of 2013.
• The industrial sector increased hiring by 1.2%, while construction, trade, transport, and social services saw job losses.
• Rural unemployment increased to 7% compared to urban unemployment of 26.2%, indicating a growing disparity.
• The unemployment rate for women (16.1%) remained higher than for men (13.8%), though the gender gap in employment decreased.
• Average wages rose, but regional disparities persisted, with Tbilisi wages 21.9% higher than the national average.

Poverty and Inequality

• The poverty rate increased due to the 2008 crisis and the Russia-Georgia conflict.
• Rural poverty remains higher (27.0%) than urban poverty (17.5%).
• The Gini index for consumption inequality remained stable, peaking at 0.42 in 2009 and dropping to 0.40 in 2006.
• The shared prosperity indicator (growth in consumption of the bottom 40%) declined by 1% annually between 2006 and 2011.
• A larger percentage of the bottom 40% are unemployed or inactive in the labor force.

Economic and Structural Policies

Fiscal Policy

• The overall fiscal balance was in surplus of 0.6% of GDP in January-September 2013, compared to a projected deficit of 2.4% for the full year.
• Tax collections increased by 4.0%, while non-tax revenues (including grants) declined by 27%.
• Social spending was prioritized, with a 26% increase in outlays for social support and health.
• Budget allocations for 2014-2017 include:
  • Increased social spending, including higher pension benefits and allocations to health and education.
  • Continued investment in agriculture and infrastructure.
  • Ensuring fiscal sustainability and maintaining a manageable fiscal deficit.
  • Improving public financial management and the efficiency of public investment.

Monetary and Exchange Rate Policies

• The central bank lowered the policy rate to a record low, but the transmission mechanism remained weak.
• Credit growth slowed to 12% in July 2013 from 24% in July 2012 due to lower demand for loans.
• Excess liquidity in the system was caused by slower lending and higher deposits.
• The current account deficit was largely absorbed by FDI inflows, though the report warns of its vulnerability to external shocks.

Structural Reforms

• The Government introduced legal and normative changes that had mixed reactions from the business community.
• Positive reforms include:
  • Strengthening worker rights through labor code modifications.
  • Proposed amendments to competition legislation to create an independent agency.
  • Tightening tax administration.
• These reforms are expected to support the medium-term structural reform agenda.

Key Information

• GDP Growth: Slowed to 1.9% in 2013, down from 7.5% in 2012.
• Inflation: Declined to 1% in the first eight months of 2013, well below the NBG's target.
• Current Account Deficit: Reduced to 5.7% of GDP, largely financed by FDI.
• FDI: Net FDI flow did not decline since last year, contributing to the current account balance.
• Employment: Growth in the formal sector was limited, while the industrial sector showed some improvement.
• Poverty: Increased from 21% in 2009 to 22.4% in 2012, with rural areas more affected.
• Social Policies: The Government expanded social safety nets, including doubling targeted social assistance and increasing pensions and healthcare access.

Conclusion

The economic slowdown in 2013 was largely attributed to political uncertainty and reduced public investment. Despite this, the Government has taken steps to improve social support and implement structural reforms. The report suggests that the economic recovery may depend on the outcome of the presidential elections and the successful implementation of the new development strategy. External financing needs have decreased, but the country remains vulnerable to external shocks. The focus on social and structural policies aims to enhance long-term economic stability and growth.