Real GDP grew 2.1% y/y in May 2015
Real GDP expanded 2.1% y/y in May 2015, according to GeoStat’s rapid estimates, and output growth averaged 2.5% y/y in 5M15. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
Tax revenues posted a strong performance in 1H15, up 11.9% y/y
Consolidated budget tax revenues increased 11.9% y/y to GEL 3.8bn (102.9% of the budgeted amount) in 1H15. Personal income tax revenues grew 16.3% y/y (26.4% of total), VAT receipts +6.9% y/y (43.6% of total), excise tax receipts +3.5% y/y (9.8% of total), profit tax receipts +33.9% y/y (14.9% of total), and property tax +9.4% y/y (4.1% of total). The rest – receipts from custom duties and other taxes – decreased, but they have a minor share in total tax revenues.
International arrivals up 9.3% y/y in June 2015
After a 14.7% spike in May 2015, tourist arrivals posted another significant jump of 9.3% y/y to 496,758 persons in June 2015, according to the Ministry of Internal Affairs. Significantly increased arrivals from Azerbaijan (+15.2% y/y, 22.8% of total), Armenia (+33.2% y/y, 22.5% of total), and Russia (+47.0% y/y, 18.0% of total) were the major contributors to growth. Arrivals from the EU decreased 0.8% in June.
Gross external debt down 1.1% q/q to US$ 13.4bn as of end-March 2015
Gross external debt of Georgia amounted to US$ 13.4bn (-1.1% q/q) and gross external debt excluding intercompany lending stood at US$ 10.6bn (-0.9% q/q) or 82.8% and 65.5% of last four quarters’ GDP, respectively, as of end-March 2015, according to NBG. These figures do not yet fully reflect the depreciation effect on nominal GDP in US$ terms. The gross debt figure was comprised of general government external debt at US$ 4.1bn (-4.2% q/q), banking sector external debt at US$ 2.8bn (+2.7% q/q), intercompany lending at US$ 2.8bn (-1.7% q/q) and other sectors’ external debt at US$ 3.8bn (+0.1% q/q). Foreign currency denominated external debt accounted for 94.2% of total. Net external debt stood at US$ 8.8bn (+1.6% q/q).
Current account deficit reached 14.1% of GDP in 1Q15
In 1Q15, current account deficit reached 14.1% of GDP (US$ 464.8mn), +4.0ppts y/y. Trade deficit, increasing 14.2% y/y, was the major contributor, as exports fell 26.0% y/y, while imports decreased just 7.3% y/y. Positive balances in services and money transfers were enough to finance almost 60% of the trade deficit. Among services, tourism had the largest positive balance, falling 3.9% y/y to US$ 241.3mn. Current transfers were the largest positive component of the current account in 1Q15, decreasing 6.9% y/y to US$ 329.9mn. Net FDI and other investments accounted for 8.9% of GDP in 1Q15. Reserves decreased by US$ 184.8mn.
Inflation rate at 4.5% y/y and 0.02% m/m in June 2015
Annual CPI inflation was recorded at 4.5% in June 2015, according to GeoStat. Overall price changes were driven by price increases on food and non-alcoholic beverages (+5.7% y/y, +1.66ppts), health (+7.4% y/y, +0.72ppts), and alcoholic beverages and tobacco (+11.4% y/y, +0.60ppts), while prices in clothing and footwear and transport categories fell 3.3% y/y and 0.6% y/y, respectively.
Monthly inflation rate was 0.02% in June 2015. Price increases in transport (+3.1% m/m, +0.35ppts) and furnishings and household equipment (+1.4% m/m, +0.10ppts) and price drops in food and non-alcoholic beverages (-1.9% m/m, -0.59ppts) were the major drivers of the monthly inflation dynamics.
NBG raised policy rate by 50 basis points to 5.5%
At its meeting on July 1, 2015, NBG’s monetary policy committee increased the policy rate by 50 basis points to 5.5%. The decision to raise the policy rate was guided by increased inflation expectations as well as domestic and external risks affecting the inflation forecast. The committee also signaled the necessity for further gradual rate increase to 6.5% by the end of the year.
