Georgia, the small South Caucasus country of 3.9mn, grew by 4.7% y/y in December and in the last quarter of 2017. Overall, the economy achieved 4.8% growth in 2017. The Georgian economy appears to have recovered from several years of slow growth across 2015-2016, when a depressed economic environment in the region and low oil prices indirectly impacted its performance. Multilateral development banks all expect the country's GDP growth to exceed 4% in the near-term, up from 2.7-2.8% in 2015-2016.

The growth spurt has been prompted by a flurry of domestic and foreign investments in construction, retail, infrastructure and real estate amidst a recovery in consumption levels and an increase in inbound tourism.

Nevertheless, consumer prices continued to increase in December, by 0.8% m/m and 6.7% y/y. The government and regulators are making efforts to slow down inflation to a maximum of 5% y/y.

Meanwhile, Georgia's foreign trade deficit inched upwards to $5.25bn in 2017, up from $5.18bn in 2016, despite the fact that exports grew faster than imports - by 29.1% y/y to $2.72bn versus 9.4% y/y to $7.97bn.

Reducing the foreign trade and overall current account deficit has been an ongoing concern in Tbilisi. An oil and gas-importing country, Georgia has struggled to expand its manufacturing basis enough to make up for its sizeable energy imports and for its imports of higher added-value goods.

On the political front, the ruling Georgia Dream party won the local elections held on October 21 by a landslide. Led by ex-football star Kakha Kaladze, who is now the new mayor of Tbilisi, Georgian Dream candidates won most of the mayoral seats in the country’s six largest cities with an unequivocal 50% or more of the votes. Promises to expand Tbilisi's economy by boosting tourism, simplify bureaucracy and build a new transportation network were central to Kaladze’s platform.