Georgia Country Report Jun22 - June, 2022

June 7, 2022

Georgia’s economy expanded by 2.6% y/y in April, according to the national statistics office Geostat. GDP growth was observed in transportation and storage, hotels and restaurants, electricity, gas, steam and air conditioning supply, financial and insurance activities, arts, entertainment and recreation and mining and quarrying. Declines were seen in construction, manufacturing, professional services, scientific and technical activities and trade.

Geostat also stated that 6,894 new businesses were registered in April, up 41.4% y/y, while exports of goods in January-April were valued at $1.5bn, up 32.8% y/y.

Georgia's real GDP grew by 10.4% in 2021, according to 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.

The World Bank is to up its economic growth forecast for Georgia to 5.5% from 2.5% (forecast issued in April), Sebastian Molineus, the World Bank’s regional director for the South Caucasus, was cited as saying by bm.ge. The Georgian economy was showing an “amazing resistance and firmness”, Molineus was quoted as saying.

In its previous spring economic outlook for Georgia, the World Bank has cut its 2022 growth forecast for Georgia to 2.5% from the 5.5% it projected pre-Ukraine war, while cautioning that there is considerable scope for further downgrades if the war continues for much longer.

Georgian external trade turnover amounted to $5.25bn in January-April 2022, posting a 33.4% increase y/y according to Geostat. Georgia's top trading partners by exports in January-April were China ($290.4mn), Azerbaijan ($168.4mn) and Russia ($156.4mn), while the top trading partners by imports were Turkey ($637.8mn), Russia ($403.3mn) and China ($324.3mn)

Georgia’s current account deficit fell by 6.4% y/y to 9.8% of GDP in 2021, according to NBG. The improvement in the balance was supported by strong growth in transfers and a recovery in the service balance following a gradual rebound in tourism revenues.

Foreign direct investment in Georgia reached $411.3mn in Q4 2021, a rise from $303.8mn last quarter and a decline of $134.2 a year ago, according to new data released by Geostat. The United Kingdom was the top contributor to FDI.

Georgian inflation hit 12.8% in April, according to the data of the National Statistical Service of Georgia, which was published on May 3. Annual inflation rate stood at 13.7% in February. Compared to the previous month, consumer prices rose by 1.8%. Georgian experts forecast the inflation rate in Georgia to begin to “decline significantly” from March to April this year.

The Monetary Policy Committee of the National Bank of Georgia (NBG) at its meeting on May 11 kept the refinancing rate at 11%. “Increased inflation and inflationary risks again remain the global challenge of the last period,” the NBG said in a statement.

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 entities, as of March 31, 2022. Compared to the previous month, the total assets of Georgian commercial banks (in current prices) increased by GEL98.04mn (0.2 percent) and constituted GEL61.79bn in March.

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.

On the political front, the de facto president of the Georgian breakaway region of South Ossetia on May 30 suspended an earlier announced referendum on whether the territory should become part of Russia. The postponement would be in effect until consultations with Moscow were complete, Alan Gagloyev said in a decree.

In other news, former Georgian President Mikheil Saakashvili, who is serving a sentence in Rustavi Prison, has been transferred to the Vivamed private clinic on 12 May amid reports of deteriorating health.

Georgian Finance Minister Lasha Khutsishvili refuted Kyiv's "completely incomprehensible" accusation that Georgia is negotiating with Russia on the re-export of Russian products on 2 May.

To view this extensive report in full including details such as —

  • Macroeconomic Analysis
  • Politics Analysis
  • Industrial sectors and trade
  • FX, Financials and Capital Markets
  • And more!

For a one-off purchase click here

For an annual subscription click here

For a free sample click here

Related Reports

Turkey Country Report Jun22 - June, 2022

In Turkey, there is a hue and cry, but not much sense is spoken. People are angry and on edge due to the sum of the situation of the country. Everyone agrees with the consensus that Turkey is exposed ... more

Ukraine Country Report Jun22 - June, 2022

Russia’s war destroys, damages over 200 factories, large enterprises in Ukraine. Ukraine will also need to restore 12 airports, over 1,000 educational institutions, and almost 300 bridges and ... more

Russia Country Report Jun22 - June, 2022

The 3.5% expansion in Russia’s GDP in Q1 is consistent with a small contraction in q/q terms, and this will almost certainly be followed by a steep fall in output in Q2 as the effects of Western ... more

Dismiss