Georgia's Economic Outlook 2020

GEORGIA'S ECONOMIC OUTLOOK IN 2020 With the COVID-19 pandemic, Georgia's economic outlook has significantly deteriorated; International Monetary Fund (IMF) expects Georgia's real GDP to decline by 4% in 2020, and the expectations of our investment arm, Galt & Taggart, are consistent with the IMF's projections; According to the IMF, falling exports, halted tourism, and weaker remittances are expected to widen the current account deficit to 10.5% of GDP in 2020. Urgent balance-of-payments needs resulting from the COVID-19 shock are expected to amount to c.US$ 1.6 billion in 2020-2021, and this gap will be financed through international support mobilised from IMF and other international financial institutions; Notably, Galt & Taggart has a different view on the current account deficit - projected at 6% of GDP in 2020. This is based on the anticipated significant reduction in imports due to savings in oil imports and demand collapse, largely compensating for the tourism revenue loss in 2020; The fiscal deficit is expected to temporarily widen to 8.5% of GDP in 2020 based on the IMF's projections, as revenues decline and spending rises to offset the social and economic impact of the pandemic. Importantly, the mobilised financing from international community also allows for the building of buffers for additional policy space, if risks further widen; Galt & Taggart's baseline scenario assumes that the pandemic fades and the economy reopens in the second half of 2020, however, the projections are subject to more than usual uncertainty. In a more adverse scenario, Galt & Taggart expects normalisation process to take longer and the Georgian economy to contract by 6%. GEORGIA'S ECONOMIC GROWTH FORECAST Source: Geostat, IMF 6.2% 7.4% 6.4% 4.4% 4.8% 4.8% 5.1% 3.0% 2.9% 3.0% 2.4% 3.6% -4.0% -3.7% 2008 2010 2012 2014 2016 2018 2020F 11

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