Georgia’s economy won’t begin turning around until 2010, one of the state’s key forecasters said Wednesday, Nov. 19.
“Net-net, the prognosis for growth in the coming 15 months is bleak,” Dr. Rajeev Dhawan, director of Georgia State University’s Economic Forecasting Center, said in his November economic report released at a forum held at the university in the morning. “The recovery will begin in 2010 but will be very tepid as credit market operations remain well below their highs.”
Georgia’s unemployment rate will increase to 7.5 percent in 2009, ticking up to 8 percent in 2010 before the economy starts to strengthen, and Georgia will lose 72,100 jobs in 2009 and gain 27,800 in 2010, according to the report.
“This recession is a severe one, even when compared to the previous one earlier in the decade,” Dr. Dhawan said.
He singled out several troubling sectors in Georgia, including banking.
“Georgia’s proportion of unprofitable institutions is currently 35 percent, almost thrice the national rate,” he said.
North Georgia’s poultry industry faces challenges from the downturn in the Russian economy, Dr. Dhawan added.
Although lower fuel prices will help poultry farmers, “the sinking ruble and oil prices also make for a much reduced demand from Russian consumers,” he said in the report. “This turn of events doesn’t bode well for the banks in North Georgia which service these agribusinesses and their suppliers, who will have a reduced demand for business loans.”
Presenting his grim forecast to several hundred people in a packed auditorium at Georgia State, Dr. Dhawan filled the presentation with gallows-type humor including jokes and cartoons satirizing the down economy.
Dr. Dhawan’s forecast does not include Georgia exports. But in an interview, he said a slowing world economy means there is “a very low chance” exports will continue to increase as rapidly as they have been.
Georgia exports increased by 24.1 percent in the second quarter of 2008, Dr. Dhawan said. Nationally, exports increased 18 percent during that same period, he said.
The European Union accounted for 32 percent of Georgia exports. Exports to China increased 35.2 percent to $1 billion.
Declining oil prices will help consumers and the airline industry, Dr. Dhawan said.
“It’s putting money back into people’s pockets,” said Dr. Dhawan.
He also said lower oil prices might help Kia Motors Manufacturing Georgia Inc. sell the sport utility vehicles it will start producing late next year at its plant in West Point. But oil prices might not make as much of a difference if credit remains tight for car loans, he said.
Nationally, “more than two million jobs will be lost” in coming months, he said, “making this recession one of the deepest since 1982.”
He anticipates a national stimulus package next year but “don’t hold your breath for it to spark an economic recovery.”
To see the full report, go to http://www.rdhawan.com/booklets/bookletpress.htm