ADB cuts 2020 economic forecasts for South Caucasus countries

The Asian Development Bank (ADB) has slashed its 2020 economic forecasts for the South Caucasus countries as they are hit by the spread of the new coronavirus, but projects a recovery in 2021.

Georgia's gross domestic product (GDP) was expected to contract by 5% in 2020, before rebounding to grow around 5% in 2021, the ADB said in its outlook report published on Thursday.

That was down from the 4.9% growth that the bank forecast in September 2019 and 0% projected in April this year.

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.

Georgian inflation was projected to slow to 5% in 2020 and 3.5% in 2021, a bit higher than the central bank's 3% target, the ADB said.

The ADB forecasts Armenia's economy would shrink by 3.5% in 2020 and then expand by 3.5% in 2021. The bank's April projection was 2.2% growth for 2020.

The Armenian government expects a contraction of 2%, down from an earlier projection of 4.9% growth.

Inflation was projected at 1.2% in 2020, accelerating to 2.5% next year. Armenia, a country of around 3 million, had registered 18,698 confirmed coronavirus cases and 309 deaths as of Thursday. It is the worst-affected country in the South Caucasus region.

GDP in oil-rich Azerbaijan was expected to contract by 0.1% in 2020, partly due to weaker oil prices, said the ADB, which in September had predicted Azerbaijan's growth would be 2.4% in 2020, but downgraded it in April to 0.5%.