Georgia recorded its first ever quarterly current account surplus since 1995
Current account turned to first surplus and stood at US$ 11.9mn or 0.3% of GDP in 3Q18, driven by solid positive balance in services and transfers. Merchandize trade deficit, traditionally the major contributor to deficit creation, increased by 2.6% y/y to US$ 1.0bn, as exports increased 22.7% y/y, while imports were up 12.4% y/y. Positive balance in services, covering almost entire goods trade deficit, was up 12.0% y/y to US$ 950.1mn (22.7% of GDP), driven by strong tourism inflows (up 12.3% y/y to US$ 1.2bn). Surplus in current transfers amounted to US$ 309.3mn (7.4% of GDP, up 10.5% y/y). Net FDI stood at 6.3% of GDP (down 52.4% y/y). In 9M18, CA deficit stood at 6.5% of GDP, down 0.6ppts y/y.

Real GDP growth was 2.2% y/y in November 2018
Georgia’s economy grew by 2.2% y/y in November 2018 after growing 6.7% y/y in previous month, according to Geostat’s rapid estimates. In November 2018, the fastest growing sectors were trade, financial intermediation and real estate. Slowdown in growth mostly reflected reduced activity in construction sector. Overall, real GDP growth was 4.7% y/y in 11M18. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Inflation was 1.5% y/y and 0.5% m/m in December 2018
Annual CPI inflation was 1.5% in December 2018 down from 1.9% in previous month, according to Geostat. Core inflation was 0.8% in December 2018 down from 1.3% recorded in previous month. Annual price changes were driven by price increases in food and non-alcoholic beverages (+1.7% y/y, +0.52ppts), alcoholic beverages and tobacco (+4.9% y/y, +0.33ppts) and healthcare (+2.9% y/y, +0.25ppts) categories, while prices were down in clothing and footwear (-6.6% y/y, -0.23ppts). On a monthly basis, there was 0.5% inflation in December 2018, mostly affected by price increase in food and non-alcoholic beverages category (+2.3% m/m, +0.69ppts).

NPLs at 2.8% in November 2018
In November 2018, the banking sector loan portfolio increased 18.9% y/y after growing 19.3% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 18.0% y/y and up 1.3% m/m to GEL 26.1bn (US$ 9.7bn). Deposits were up 11.4% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 10.4% y/y and down 1.1% m/m to GEL 22.0bn (US$ 8.2bn). Deposit dollarization stood at 64.0% (-3.5ppts y/y and +0.6ppts m/m) and loan dollarization was 56.6% (-1.5ppts y/y and +0.3ppts m/m). NPLs stood at 2.8% in November 2018 (-0.6ppts y/y and flat m/m).

Tourist arrivals up 11.6% y/y in December 2018
Total international visits to Georgia increased by 0.2% y/y to 0.46mn in December 2018, according to the Ministry of Internal Affairs. A 11.6% y/y increase in tourist arrivals (0.27mn trips, 58.8% of total) was the sole contributor to arrival growth as same-day arrivals fell 12.5% y/y. Out of top countries, in December 2018, international visitors continued to increase from Russia (+22.7% y/y) and Azerbaijan (+5.1% y/y), while visitors were down from Armenia (-11.9% y/y), Turkey (-18.8% y/y) and Iran (-4.0% y/y). Total international visitors stood at 7.2mn persons (+11.1% y/y) in 2018, while tourist arrivals stood at 4.8mn (+16.9% y/y, 66.0% of total).

International reserves stood at US$ 3.3bn in December 2018
Gross international reserves were up 8.2% y/y to US$ 3.3bn in December 2018 according to NBG. Change in reserves was attributed to NBG’s FX auctions (total purchase of US$ 65.0mn in Dec-18 and US$ 197.5mn during Apr-Dec 2018), government FX operations and/or asset revaluation.

NBG purchased US$ 25.0mn
On 4 and 9 January 2019, the NBG intervened on the FX market and purchased US$ 15.0mn and US$ 10.0mn, respectively, to accumulate FX reserves.