Financiers and economists agree that the economies of the South Caucasus, together with the pandemic crisis, had to deal with other shocks: last year's sharp drop in oil prices, the lockdowns, the Karabakh war, and the political crisis.
The negatives of the political crisis in the economy were especially high in Armenia and Georgia. According to economists, worst of all, in 2021, the problem has escalated and exacerbated, increasing the economic cost of political instability and making it more expensive to pay for residents and businesses. The crisis in Georgia was followed by parliamentary elections and the loss of Karabakh territories in Armenia.
Additional problems for the economies of the Caucasus got caused because of the second lockdown. The tightening of restrictions had a severe impact on the economies weakened by the first lockdown. The most severe restrictions from the Caucasus countries were in Georgia. The severity of restrictions in Georgia was assessed with 83.8 out of 100 points. Our country holds the 6th position in the world among the countries with the most severe restrictions.
The result was not delayed, and in January, the Georgian economy in the region shrank the most, by 11.5%.
Compared to other countries in the region, Azerbaijan has suffered the least from coronavirus prevention restrictions. The fact is that a large share of the economy of Azerbaijan falls on the oil industry, and because restrictions were not extended to this industry, the economy of Azerbaijan shrank by only 2.5% in January.
As for Armenia, economists compare Georgia to the structure of the Armenian economy. The Armenian economy was reduced by 7.5% last year due to the pandemic and the 47-day war in Karabakh. The economy of this country has been reduced by the same amount in January of 2021.
Experts emphasize that the change in the oil market directly impacts the economy of Azerbaijan and on the economies of Armenia and Georgia through foreign trade. Economists argue that overcoming the economic crisis depends entirely on immunization.
According to the World Bank, Georgia's economy will grow by 4.0% during the year, while Armenia is expected to grow by 3.1%, Azerbaijan's GDP is expected to grow by 1.9% in 2021, and economic growth is expected to accelerate to 4.5% in 2022.
According to the International Monetary Fund, Georgia will have an economic growth forecast of 5% in 2021, and in 2021-2025 will be the first in the region with 5.5% economic growth.
