Exports up by 45.0% y/y in May 2021
In May 2021, exports increased by 45.0% y/y to US$ 339.4mn after a 70.0% y/y growth in previous month (notably, exports was broadly flat vs May 2019). Imports also increased by 40.3% y/y to US$ 742.3mn, after growing 58.0% y/y in previous month (notably, imports was down 6.5% vs May 2019). As a result, trade deficit widened by 36.5% y/y to US$ 402.9mn in May.
In May 2021, copper (+48.8% y/y), cars (+186.6% y/y), ferro-alloys (+89.5% y/y), wine (+6.1% y/y) and spirits (+10.3% y/y) were the top 5 exported commodities. A 12.0% of exports were directed to the EU (-39.1% y/y), 46.6% to the CIS (+74.5% y/y) and 41.4% to other countries (+83.3% y/y).
Cars (+3.4% y/y), petroleum (+139.1% y/y), copper (+31.8% y/y), pharmaceuticals (+34.4% y/y) and telephones (+302.5% y/y) represented the top 5 imported commodities in May 2021.
Overall in 5M21, trade deficit was up by 9.6% y/y to US$ 1.9bn, as exports increased by 24.4% y/y to US$ 1.5bn and imports increased by 15.7% y/y to US$ 3.5bn.
NPLs at 2.3% in May 2021
In May 2021, the banking sector loan portfolio growth accelerated to 11.3% y/y (+1.2% m/m), excluding FX effect, after a 9.8% y/y growth in previous month. In unadjusted terms, loan portfolio was up 15.7% y/y (-1.5% m/m due to GEL appreciation), amounting to GEL 39.5bn (US$ 12.1bn). By sector, loan growth accelerated in both corporate and retail segments to 9.4% y/y and 13.2% y/y, respectively (exc. FX effect) in May. Notably, newly issued mortgages surged by 725.1% y/y, bringing mortgages stock growth to 12.3% y/y, after growing 11.3% y/y in previous month (exc. FX effect). In May 2021, loan dollarization stood at 54.0% (-3.70ppts y/y and -1.48ppts m/m) and NPLs stood at 2.3% (flat y/y and +0.07ppts m/m).
Bank deposits increased by 22.1% y/y (+2.5% m/m, exc. FX effect) to GEL 35.4bn (US$ 10.8bn) in May 2021. By currency, GEL deposits increased by 37.3% y/y and FX deposits were up 13.6% y/y (exc. FX effect). The deposit dollarization stood at 60.7% (-3.37ppts y/y and -2.00ppts m/m).
Producer price index up 15.5% y/y in May 2021
Annual PPI for industrial goods retreated to 15.5% in May 2021 from 17.5% in previous month, according to Geostat. Price changes in manufacturing (+15.5% y/y) and electricity, gas, steam and air conditioning (+16.1% y/y) contributed the most to the overall index change.
NBG keeps its policy rate unchanged at 9.5%
At its meeting on 23 June 2021, NBG’s monetary policy committee decided to keep its policy rate unchanged at 9.5%. Annual inflation was 7.7% in May 2021; NBG expects inflation to peak in June and average 7.0% in 2021. The central bank noted that the contribution from imported and food prices to the inflation rate is still high due to rising prices on international markets and the exchange rate depreciation in previous periods. At the same time, rising global oil prices are pushing fuel prices higher and, consequently, increasing their contribution to inflation, NBG commented. The regulator expects inflation to gradually return to its target level of 3% in 2022 by maintaining tight monetary policy for a prolonged period and the expected fade-out of one-off exogenous factors. The next committee meeting is scheduled for 4 August 2021.
