Georgia's real GDP grew by 10.4% in 2021, according to preliminary data issued by the statistics office Geostat on March 21. Last year, GDP at current prices amounted to GEL60.2bn ($18.7bn), which is 22.3% higher than the corresponding figure for 2020. At the same time, in 2021, the percentage change in the GDP deflator was 10.8%.
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 the arts, entertainment and recreation sector, manufacturing, transportation and storage, trade, hotels and restaurants, electricity, gas, steam and air conditioning supply, real estate activities, while construction was in a declining state.
The estimated real GDP growth rate in January amounted to 18.0% y/y in Georgia, according to the Geostat. A total of 3,235 new businesses were registered in January, a 14.1% increase compared to January 2021. Exports of goods in January totalled $331.3mn, increasing by 47.6%.
Georgian Prime Minister Irakli Garibashvili said the pace of the growth of the Georgian economy needed to be maintained, adding ”we should continue to build the country and calmly manage the process”. The World Bank’s report on Global Economic Prospects 2022 says the Georgian economy is projected to grow 5.5% in 2022 and 5% in 2023, while the Asian Development Bank’s 2021 Outlook predicts a 6.5% growth for the country’s economy this year.
According to the decision of the Interdepartmental Coordination Council under the Government of Georgia, from March 28, wearing a mask in an open space will be optional. The head of the Operational Headquarters of the Coordination Council, Giorgi Gibradze said that wearing a mask remains mandatory in public transport and in enclosed spaces.
Over the past two weeks, the positivity rate has fallen to 5% with a reproduction index of 0.47, he said. At the same time, the lowest death rate (7) since the summer of 2021 was recorded. As of March 22, 1,643,295 cases of coronavirus infection have been confirmed in the country (excluding the occupied regions). 1,601,578 infected have already fully recovered, and 16,678 have died.
Georgia’s consumer price index increased by 0.9% in February 2022 compared to the previous month, while the annual inflation rate stood at 13.7%. Georgian experts forecast the inflation rate in Georgia to begin to “decline significantly” from March to April this year, Prime Minister Irakli Garibashvili said on February 23, adding a reduction in inflation had already been observed in the final months of 2021.
The Monetary Policy Committee of the National Bank of Georgia (NBG) on March 30 increased its key refinancing rate by 0.5pp to 11%. This decision was mostly driven by the rise in global commodity prices affecting Georgia via high oil prices as well as a wave of monetary policy tightening across the regional countries. 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.
In January-February, compared to the corresponding period of the previous year, Georgia's foreign trade increased by 49.3% and amounted to $2.54bn. Exports increased by 54.5% to $760.4mn, while imports increased by 47.2% to $1.78bn. The negative trade balance amounted to $1.02bn, which is 40.2% of the country's foreign trade turnover. Turkey was Georgia's largest trading partner with a turnover of $354.3mn.
Georgia’s foreign trade deficit deepened by 48% y/y to $564mn in February, according to preliminary data released by the statistics office Geostat.
The country’s exports surged robustly by 60% y/y to $429mn, but the imports’ 53% y/y advance resulted in a volume more than twice as large: $992mn.
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, Georgia’s government plans to take President Salome Zurabishvili to court, arguing that the trip to Europe – which the Dream party said was taken without approval from parliament – had overstepped her largely ceremonial powers. She traveled herself to Paris and Brussels to help along Georgia’s snap application for European Union membership and to publicly dispel doubts about where Georgia stands vis-a-vis Ukraine and Russia.
Almost all Georgian officials condemned Russia’s recognition of the Ukrainian regions' independence, which mirror the way Moscow encouraged the secession of South Ossetia and Abkhazia from Georgia.
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