Real GDP shrinks 13.5% y/y in May 2020
Georgia’s economy contracted by 13.5% y/y in May 2020 after falling 16.6% y/y in previous month, according to Geostat’s rapid estimates. Real growth was down in all sectors reflecting lockdown effects. Overall, real GDP growth was down 5.4% y/y in 5M20. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
Inflation was 6.1% y/y and -1.4% m/m in June 2020
Annual CPI inflation retreated to 6.1% in June 2020 from 6.5% in May 2020, according to Geostat. Core inflation (non-food, non-energy) was 6.6% in June 2020, while core inflation excluding tobacco was 6.2%. Annual price changes were driven by price increases in food and non-alcoholic beverages (+13.6% y/y, +4.15ppts), healthcare (+7.5% y/y, +0.61ppts) and furnishings, household equipment & maintenance (+9.6% y/y, +0.58ppts) categories. Meanwhile, prices were down in transport (-8.6% y/y, -1.08ppts) category. On a monthly basis, there was 1.4% deflation in June 2020, affected by price decrease in food and non-alcoholic beverages (-4.8% y/y, -1.60ppts).
Current account deficit almost doubled in 1Q20, coming in at 11.0% of GDP or US$ 417.7mn (+86.2% y/y), according to NBG. Merchandize trade deficit, traditionally the major contributor to deficit creation, increased by 11.4% y/y to US$ 885.9mn, as exports declined by 6.2% y/y, while imports were up 1.2% y/y. Positive service balance declined by 32.3% y/y to US$ 251.4mn (6.6% of GDP), reflecting the drop of tourism inflows. Surplus in current transfers amounted to US$ 370.9mn (9.8% of GDP, up 12.3% y/y). Together, services and transfers financed 70% of the trade deficit. Reserves were down by US$ 98.7mn as net FDI (3.3% of GDP) and other investments (3.2% of GDP) partly financed the CA deficit.
NBG sold US$ 20mn
On 2 July 2020, the NBG intervened on the FX market and sold US$ 20mn to limit GEL volatility. This was 8th FX intervention YTD for a total sale of US$ 229.7mn through FX auctions.
