Real GDP growth was 5.0% y/y in June 2019
Georgia’s economy grew by 5.0% y/y in June 2019 after growing 4.7% y/y in previous month, according to Geostat’s rapid estimates. In June 2019, the growth base was diversified with manufacturing, real estate operations, construction, trade, transport and hotels and restaurants sectors posting increases. Overall, real GDP growth was 4.9% y/y in 1H19. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
Inflation was 4.6% y/y in July 2019
Annual CPI inflation was 4.6% in July 2019 up from 4.3% in June 2019, according to Geostat. Core inflation (non-food, non-energy, non-tobacco) was 1.9% in July 2019 up from 1.4% in previous month. Annual price changes were driven by price increases in food and non-alcoholic beverages (+7.9% y/y, +2.33ppts), alcoholic beverages and tobacco (+13.7% y/y, +0.92ppts) and transport (+3.9% y/y, +0.48ppts) categories. Meanwhile, prices were down in clothing and footwear (-7.1% y/y) and communication (-2.4% y/y) categories.
NBG sold US$ 32.8mn
On 1 August 2019, the NBG intervened on the FX market and sold US$ 32.8mn out of offered US$ 40mn to support the national currency. This intervention followed the central bank’s statement that despite positive foreign and domestic macroeconomic dynamics, the GEL’s recent excessive depreciation related to tourism shock and negative expectations, created risks to price stability. NBG also noted that it will again intervene on the currency market in the coming days and use other monetary policy tools to support the currency if needed. Importantly, the GEL’s REER and NEER hint to substantial undervaluation of the currency. As a result of this intervention the GEL quickly strengthened 2.9% against US$ from 2.97 to 2.89 during 1-2 August.
