Tourist arrivals up 27.2% y/y in August 2017
Total international arrivals to Georgia increased 27.4% y/y to 1.08mn visitors in August 2017, according to the Ministry of Internal Affairs. Arrival growth was mainly driven by surge in tourist arrivals increasing 27.2% y/y to 0.57mn persons (53.1% of total) in August after posting a 32.9% y/y growth in July 2017. Out of top countries by arrivals, in August 2017, visitors continued to increase from Armenia (+11.7% y/y), Russia (+27.8% y/y), Iran (+85.1% y/y), Azerbaijan (+18.5% y/y) and Turkey (+42.2% y/y). Arrivals from EU were up 29.8% y/y to over 36,500 visitors. In 8M17 international arrivals increased 18.9% y/y to 5.1mn visitors, while tourist arrivals increased 29.4% y/y to 2.4mn.
Inflation was 5.7% y/y and 0.2% m/m in August 2017
The annual CPI inflation was 5.7% in August 2017 after 6.0% inflation in previous month, according to GeoStat. Core inflation was 4.3% in August, same as in previous month. Overall price changes were driven by price increases in food and non-alcoholic beverages (+6.2% y/y, +1.88ppts), transport (+11.6% y/y, +1.46ppts), and alcoholic beverages and tobacco (+17.5% y/y, +1.14ppts) categories. On a monthly basis, there was 0.2% inflation in August 2017. Price increases in housing, water, electricity, gas and other fuels (+1.9% m/m, +0.17ppts) and in food and non-alcoholic beverages (+0.5% y/y, +0.16ppts) categories and price decrease in transport category (-0.7% m/m, -0.09ppts) were the major drivers of monthly Inflation dynamics.
NBG keeps its policy rate unchanged at 7.0%
At its meeting on 6 September 2017, NBG’s monetary policy committee decided to keep the policy rate unchanged at 7.0%. The decision is based on the macroeconomic forecast, according to which the inflation is expected to be above 4.0% target rate during 2017 due to one-offs. NBG added that the increase in inflation is temporary and the inflation will get close to the 3.0% target level in the beginning of 2018, once temporary factors expire. NBG also noted that inflation expectations are stable and it expects the key rate to gradually decrease to its neutral level in the medium term given the absence of additional factors affecting price level. The next committee meeting is scheduled for 25 October 2017 (NBG increased the key rate to 6.75% on January 25 and to 7.0% on May 2, and kept the rate unchanged at two previous meetings, on June 14 and on July 26).
FDI down 14.3% y/y in 2Q17
FDI in Georgia stood at US$ 346.6mn (-14.3% y/y) in 2Q17, according to GeoStat’s preliminary figures. Similar to previous quarters, the transport and communications sector was the largest FDI recipient at US$ 130.4mn (-25.1% y/y, 37.6% of total) in 2Q17, followed by the construction at US$ 70.0mn (+408.5 y/y, 20.2% of total). Azerbaijan topped the list of investors with US$ 126.9mn, followed by Netherlands at US$ 42.9mn, Turkey at US$ 39.3mn, and United Kingdom at US$ 31.5mn.
International reserves up 0.9% y/y in August 2017
Gross international reserves were up 0.9% y/y to US$ 2.9bn in August 2017, while reserves were down 0.8% on a monthly basis, according to NBG. The change in reserves was related to FX interventions and/or government FX operations.
