The first wave of COVID-19 has now ended in Georgia and while few new cases still get discovered daily, the country is nonetheless going through a period of respite. Regulations that were imposed in Spring have now been lifted and society is adjusting to the life post-COVID-19. Face masks, social distancing and fever screening are being normalised at all places of social gatherings- restaurants, offices, retail stores, etc.
Because the Georgian economy relies heavily on service sectors, and since many of these sectors have not yet gone back to the pre-pandemic levels of operation, economic recovery still seems to be a long-term endeavor. Oxford Economics has forecast a negative 1.29% real growth in GDP in 2020. IMF has a bleaker projection of -4.0% - a position shared by the National Bank of Georgia (NBG). Recovery forecasts range between 3-6% in 2021.
One of the primary concerns of the Georgian developers, devaluation of GEL, has been curbed somewhat by the efforts of the NBG. Residential real estate is starting to look up, but expectations are low for the entirety of 2020. In spite of the uptick in transactions between May and April year-on-year comparison suggests greater than 60% drop in demand.
COVID-19 has severely affected the Georgian economy and its ramifications will likely worsen the longer the country stays in lockdown and under a State of Emergency. The country’s economy is heavily reliant on service sectors which have been hardest hit. Tourism, hospitality and retail are paralysed, while the office sector is plunged into a state of turmoil as tenants attempt to renegotiate lease terms.
Capital markets has experienced an expected slowdown. The number of transactions for both commercial and private properties took a dive in March and April is shaping up to be similar. The pricing impact has been immediate, with Developers projecting a 40-50% drop in annual revenue.
Some recovery measures have been implemented by the Government of Georgia as well as the private sector. The largest commercial banks have instituted a grace period on hospitality related loans and the Government is subsidising income and postponing VAT payments. Grants have been issued to help those made unemployed. Additionally, a plan for the reopening of public and semi-public spaces has been announced and will take effect on 27 April. If the epidemiological situation remains stable, the initial steps may be made on the path to socio-economic recovery.