Real GDP growth was 3.8% y/y in December 2019
Georgia’s economy expanded 3.8% y/y in December 2019 bringing 4Q19 real GDP growth at 5.3% y/y, according to Geostat’s rapid estimates. Overall, real GDP growth was 5.2% y/y in 2019. In December 2019, real growth was recorded in manufacturing, transportation and storage, trade and hotels and restaurants sectors. Meanwhile, growth was down in construction sector. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
NPLs at 1.9% in December 2019
In December 2019, the banking sector loan portfolio increased 16.2% y/y after growing 14.5% y/y in previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 20.1% y/y and up 1.8% m/m to GEL 31.9bn (US$ 11.1bn). Deposits were up 9.0% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 13.9% y/y and unchanged m/m to GEL 26.2bn (US$ 9.1bn). Loan dollarization stood at 55.1% (-1.76ppts y/y and -0.25ppts m/m) and deposit dollarization reached 64.1% (+1.00ppts y/y and +0.17ppts m/m). NPLs stood at 1.9% in December 2019 (-0.75ppts y/y and -0.62ppts m/m).
NBG keeps its policy rate unchanged at 9.0%
At its meeting on 29 January 2020, NBG’s monetary policy committee decided to keep its policy rate unchanged at 9.0%. Annual inflation came in at 7.0% in Dec-19, as GEL depreciation along with one-off factors resulted in overshooting the 3% inflation target. In response to neutralize depreciation-related inflationary pressures NBG tightened policy from September 2019. NBG commented that along with the policy tightening, nominal effective exchange rate slightly appreciated in December but still remained undervalued. By NBG’s forecast the inflation will start declining from the beginning of 2020 and approach the target by the end of 2020. NBG commented that the monetary policy will remain tightened until the medium-term inflation expectations are reduced to 3%. The next committee meeting is scheduled for 18 March 2020.
