The National Bank of Georgia publishes the new issue of macroeconomic scenarios for the purpose of an International Financial Reporting Standard IFRS 9.

The scenarios are intended for promoting transparent, consistent, and efficient financial reporting in financial institutions. The current update of the scenarios serves to provide the financial institutions in a timely manner with forward-looking macroeconomic information in the face of uncertainty related to the ongoing regional and international geopolitical events.

In the current issue of the scenarios, the main drivers of macroeconomic variables are the assumptions regarding the duration of global tariff policies, along with the speed of normalization of Georgia’s economic potential. In the baseline scenario, short-term economic growth is primarily driven by high-productivity sectors and external demand, while medium-term growth is determined by the normalization of these factors. The upside scenario assumes a faster easing of tariff policies imposed this year and a reduction in uncertainty related to trade flows compared to the baseline scenario. The adverse scenario highlights the risks of tighter global trade and financial conditions, against the backdrop of a more severe global tariff and migration policy stance than in the baseline scenario. It should be noted that uncertainty and risks regarding the outlook remain high.

According to IFRS 9, forward-looking information is essential for credit risk assessment. In particular, expected developments in macroeconomic and financial environment, as well as domestic and external risks should be accounted for when assessing expected credit losses. This will facilitate timely recognition of credit risk and, therefore, contribute positively to financial stability. The risk scenarios presented in the document do not represent the forecast of the National Bank of Georgia, and their publication serves to ensure transparent and efficient implementation of IFRS 9 by financial institutions.

In addition, it is important that the macroeconomic assumptions used by different financial institutions are comparable. This can be accomplished by utilizing the published macroeconomic scenarios.