Due to the ongoing conflict in the Middle East, energy prices are expected to increase. However, Georgia should focus on inflationary pressures in other sectors of the economy, - Abdul Abiad, Deputy Chief Economist at the Asian Development Bank (ADB), said in response to a question from an InterPressNews correspondent.

According to him, amid the ongoing conflict in the Middle East, inflationary risks are increasing for Georgia, as well as for other countries. Abdul Abiad noted that the National Bank of Georgia (NBG) should approach any revision of monetary policy with caution.

Meanwhile, amid increased global uncertainty and geopolitical tensions, today the Monetary Policy Committee of the NBG raised the refinancing rate by 0.25 percentage points to 8.25%.

„On how the central bank can reduce inflation, the challenges faced by the National Bank of Georgia are similar to those seen across the region amid this large shock [the Middle East conflict]. The key is to avoid tightening policy prematurely in a way that could choke off growth, while closely monitoring signs of second-round effects. While energy prices are likely to rise due to developments in global markets, the main focus should be on broader inflationary pressures across the rest of the economy,“ - said deputy Chief economist at ADB.

Abdul Abiad also spoke about attracting investment and noted that, in the long term, the growth of FDI in Georgia depends on improving labor market skills and productivity.

“FDI related challenges for Georgia should be viewed in a longer-term perspective rather than a short-term one. The key challenges the country faces include skills mismatches in the labor market, relatively low productivity, and exposure to external shocks. Addressing these requires continued investment in education and skills development, strengthening infrastructure and connectivity, and advancing structural reforms to support private sector development,“ - said Abdul Abiad.

In a scenario of early stabilization of the conflict in the Middle East, the Asian Development Bank predicts inflation in Georgia at 3.8% in 2026.

The Asian Development Bank’s annual meetings are being hosted by Samarkand, Uzbekistan, from May 3 to 6. The main theme of this year’s meetings is: “Crossroads of Progress: Advancing the Region’s Connected Future.”

An InterPressNews reporter is on site and will cover the main issues related to the summit.