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.
The estimated real gross domestic product (GDP) growth rate in January amounted to 18.0% y/y in Georgia, according to the Geostat report released on 28 February. 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 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.
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 consumer price index increased by 1.1% in January 2022 compared to the previous month, while the annual inflation rate stood at 13.9%. 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 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, demonstrators are demanding the resignation of Georgian Prime Minister Irakli Garibashvili because of his scepticism over sanctions. A rally was announced by the Droa party to call for the resignation of "traitor Garibashvili" on February 28. In response to the prime minister's statement, Droa party leader Elene Khoshtaria said that "it's a Russian lie that sanctions are ineffective".
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.
President Salome Zurabishvili said in a video address from Paris that "none of us expects any measures that would endanger this country, but all of us expect solidarity, you expect it, I expect it too." The president, with this speech, is likely to have indirectly responded to the statements of Garibashvili about Ukraine, which have caused outrage in a significant part of the society in recent days.
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