Real GDP grew 2.2% y/y in September 2015 and 2.7% y/y in 9M15
Georgia’s real GDP grew 2.2% y/y in September 2015 (real growth was 4.1% y/y in September 2014), according to GeoStat’s rapid estimates. As a result, output growth averaged 2.7% y/y in 9M15. Based on our estimates, tourism (visitors up 12.6% y/y), operations in real estate (property registration up 9.1% y/y), and banking sector credit portfolio growth (+12.8% y/y in real terms) were the main contributors to growth, while exports remained a drag in September. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

NPLs in comfortable territory
In September 2015, the loan portfolio grew 12.8% y/y, excluding the exchange rate effect (+35.7% y/y and +2.1% m/m in unadjusted terms), to GEL 15.7bn (US$ 6.6bn). Deposits grew 5.9% y/y, excluding the exchange rate effect (+29.2% y/y and +3.2% m/m in unadjusted terms), reaching GEL 13.8bn (US$ 5.8bn). NPLs remain under control at 2.9% in September 2015, down 0.4ppts m/m and down 0.6ppts y/y. In addition, the banking sector remains profitable – ROE reached 16.3% in 3Q15, up 0.9ppts y/y.

NBG sold US$ 20mn
NBG sold US$ 20mn on the FX market to support the lari on 27 October 2015. It was NBG’s 7th  intervention this year, with total sales of US$ 247mn. The lari has weakened 0.5% in October and 21.5% ytd against the dollar (US$ per unit of lari), 13.4% ytd against the Euro, and 1.3% ytd against the Turkish lira.

International ranking
According to the 2016 Doing Business report, Georgia ranks 24th among 189 economies and 4th in Europe and Central Asia after Macedonia, Lithuania and Latvia. Notably, there was no change in ranking compared to 2015, as the methodology was updated with new measures of regulatory quality in 4 indicator sets; Georgia ranked 15th in 2015 based on the previous methodology. 2016 Doing Business report captured 2 new reforms implemented in the country: 1) Georgia made dealing with construction permits easier by reducing the time needed for issuing building permits and 2) Georgia made enforcing contracts easier by introducing an electronic filing system for court users. The report also highlights Georgia’s outstanding performance, through 39 regulatory reforms, over the past 12 years in all 10 areas measured by Doing Business. Strengthening minority investor protection is mentioned among the most notable reforms in Georgia.