Real GDP growth was 5.1% in 2019
Georgia’s real GDP growth in 4Q19 was revised downwards to 5.1% from 5.3% bringing growth for the full year 2019 to 5.1%. In 2019, the information & communication was the fastest growing sector (+15.2% y/y), followed by professional, scientific & technical activities (+14.4% y/y), entertainment & recreation (+14.3% y/y), healthcare (+9.6% y/y), accommodation & food service activities (+8.9% y/y), trade (+8.8% y/y) and education (+8.8% y/y) sectors. In 2019, real growth was down in public administration (-2.7% y/y), financial & insurance activities (-2.1% y/y), mining (-2.0% y/y) and agriculture (-1.1% y/y).
Exports flat y/y in February 2020
In February 2020, exports decreased by a mere 0.5% y/y to US$ 263.6mn, imports were up 8.4% y/y to US$ 702.5mn. As a result, the trade deficit widened 14.5% y/y to US$ 438.9mn, according to Geostat.
In February 2020, cars (+59.5% y/y), copper (+11.3% y/y), ferro-alloys (-18.4% y/y), wine (-22.6% y/y) and fertilizers (-42.5% y/y) were the top 5 exported commodities. A 19.7% of exports was directed to the EU (-11.4% y/y), 47.7% to the CIS (-2.0% y/y) and 32.6% to other countries (+10.1% y/y).
Cars (+49.7% y/y), petroleum (-2.0% y/y), copper (+32.4% y/y), gases (+10.3% y/y) and pharmaceuticals (-31.3% y/y) represented the top 5 imported commodities in February 2020.
Overall, in 2M20, trade deficit was up 8.2% to US$ 801.3mn as exports increased by 4.5% y/y to US$ 526.3mn and imports increased by 6.7% y/y to US$ 1.3bn.
Producer price index up 6.7% y/y in February 2020
Annual PPI for industrial goods was up 6.7% in February 2020 according to Geostat. Rising prices in manufacturing (+7.0% y/y) contributed the most to the overall index change.
NBG sold US$ 40.0mn
On 19 March 2020, the NBG intervened on the FX market and sold US$ 40.0mn to curb GEL depreciation pressure. This was second FX intervention in 2020 for a total of US$ 60.0mn sales.
NBG kept its monetary policy rate unchanged at 9.0%
At its meeting on 18 March 2020, NBG’s monetary policy committee decided to keep its policy rate unchanged at 9.0%. According to NBG, currency depreciation puts upward pressure on inflation expectations, while weak demand puts a downward pressure. Therefore, the NBG communicated that the policy rate may move in both directions depending on the exchange rate/demand effects. NBG also approached the IMF to increase access to funding, while, additional funds will be allocated by other international donors to mitigate the effects of the coronavirus pandemic. The next committee meeting is scheduled for 29 April 2020. However, if necessary, the committee will consider the possibility of extraordinary meeting.
