Georgia’s economy rose by 9.6% y/y in December 2021 and ended the full year with an outstanding double-digit growth rate of 10.6%, according to preliminary data issued by the statistics office Geostat.
The country’s economy thus fully reversed the 6.8% contraction seen in 2020 when it dropped to $15.8bn from $17.5bn-17.6bn in 2018-2019.
There was growth in manufacturing, transportation and storage, trade, hotels and restaurants, electricity, gas, steam and air conditioning supply, real estate activities, arts, entertainment and recreation sectors, while construction was in a declining state.
Under its latest projection issued in November, the European Bank for Reconstruction and Development (EBRD) said that Georgia’s economy would rise by 7.5% in 2021 and 5.5% in 2022. The government of Georgia revised in November its budget in line with a 10% expected growth (9.5% previously), assuming 6% GDP growth in 2022.
A total of 4,553 new businesses were registered in December 2021, which is a 21% increase compared to December 2020. VAT payers’ turnover amounted to GEL11.5bn ($3.7bn), a 31.2% increase y/y. Exports of goods in December totalled $4.2mn, increasing by 26.9%.
Georgian Finance Minister Lasha Khutsishvili said ‘by the end of 2022, the volume of our economy will approach GEL65bn, and GDP per capita will be more than $5,600" on 15 December 2021.
The World Bank’s January edition of Global Economic Prospects 2022 report says that the Georgian economy is projected to grow 5.5% in 2022 and 5% in 2023.
The hospitalisation rate for those infected with coronavirus in Georgia has decreased from 20% to 4.5%, Georgian Health Minister Zurab Azarashvili said on January 26.
Overall, 1,607 cases of the Omicron variant have been confirmed in the country as of January 26.
Georgia instituted a COVID-19 ‘green pass’ system in order to visit stores and restaurants on December 1.
Georgia’s inflation peaked at 13.9% y/y in December after it has hovered between 12% y/y and 13% y/y since August. The food prices, 15.6% higher than a year earlier, remain the main inflationary driver. Georgia’s producer price index (PPI) for industrial products was up by 3.8% m/m and 20.3% y/y in December 2021, according to Geostat.
The Monetary Policy Committee of the National Bank of Georgia (NBG) on December 8 increased its key refinancing rate by 0.5pp to 10.5%, in the fourth rate hike in 2021. Loose fiscal policy, imported inflation and aggregate demand have all contributed to the persistent double-digit inflation. NBG stressed that it is keeping the monetary policy stance tight, as increased inflation remains a challenge for Georgia.
There are 14 commercial banks in Georgia, including 13 foreign-owned banks as of January 1, 2022. In December 2021, compared to the previous month, the total assets of Georgian commercial banks (in current prices) increased by GEL1.04bn (1.75%) and constituted GEL60.57bn.
The aggregated net profit of Georgia’s banking system in January-October rose by 38% compared to the same period in 2019, to GEL 1.76bn ($567mn), according to the central bank. In the same period last year, the banks reported GEL85mn net losses, caused by the mandatory provisions set aside for the expected deterioration in the quality of their loans. Since then part of the provisions was released – which contributed to the robust profits in 2021.
The banking system remains adequately capitalised and liquid, according to the IMF. 3Q21 earnings for the two largest banks- TBC and Bank of Georgia - saw robust growth driven by a solid operating performance.
On the trade front, the central bank took note of some positive developments including a 27% annual increase in exports in 2021 to $4.24bn. Overall, in 2021, the trade deficit increased by 24% y/y to $5.83bn compared to 2020, as exports were solid and made the biggest contribution.
Turkey remains one of Georgia’s top trade and economic partners. Earlier statistics from Geostat showed that Turkey was Georgia’s top overall trade partner in 2021, with $1.814bn of total trade.
Georgia’s current account deficit contracted by 35% y/y in the third quarter of 2021 to $371mn, the smallest gap in the past two years, as tourism revenues soared 13 times y/y to $566mn.
Foreign direct investment (FDI) in Georgia reached $299mn in the third quarter of 2021, marking an increase of 1.4% y/y, and a recovery in relative terms from Q1, when FDI was down a whopping 28% y/y.
On the political front, jailed Georgian ex-president Mikheil Saakashvili’s condition is not improving, his doctors say. Saakashvili ended his 50-day hunger strike on November 21 after authorities agreed to move him to a military hospital. The pro-Western politician was arrested after returning to Georgia having lived abroad for years.
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