Georgia ranks 7th globally in 2020 Doing Business by World Bank. Georgia made notable improvement in “Dealing with construction permits” category as measured by 2020 report, as the country improved its building quality control by increasing public access to information. Report also mentions that for starting a business, Georgia and New Zealand have the lowest number of procedures required.
NBG increases its policy rate by 1ppts to 8.5%
At its meeting on 23 October 2019, NBG’s monetary policy committee increased the policy rate by 1ppts to 8.5%, after increasing the rate by 1ppts in September. The annual inflation came in at 6.4% in September 2019, affected by the increased pass-through from the nominal exchange rate depreciation along with one-off factors. The recent inflationary pressure is only partially offset by the aggregate demand side factors as the economic activity is improved compared to previous periods. The NBG also noted that the future decisions of the committee will depend upon the speed of neutralization of exchange rate pressure stemming from the exchange rate depreciation. According to NBG, the inflation will remain above the 3.0% target during this year, will start to decline from March 2020 and stay close to the target in the medium term. Next monetary committee meeting will take place on 11 December 2019.
NPLs at 2.6% in September 2019
In September 2019, the banking sector loan portfolio increased 14.6% y/y, unchanged from the previous month, excluding the exchange rate effect. In unadjusted terms, loan portfolio was up 21.3% y/y and up 1.9% m/m to GEL 30.1bn (US$ 10.2bn). Deposits were up 8.1% y/y excluding the exchange rate effect. In unadjusted terms, deposits were up 16.8% y/y and up 1.1% m/m to GEL 25.6bn (US$ 8.7bn). Loan dollarization stood at 55.0% (-0.59ppts y/y and m/m) and deposit dollarization reached 63.9% (+1.44ppts y/y and +0.15ppts m/m). NPLs stood at 2.6% in September 2019 (-0.05ppts y/y and -0.14ppts m/m).
Trade deficit increased by 6.6% y/y in September 2019
In September 2019, exports were up 0.5% y/y to US$ 302.6mn, imports increased by 4.0% y/y to US$ 748.6mn and the trade deficit increased 6.6% y/y to US$ 446.0mn, according to Geostat. In September 2019, cars (+83.0% y/y), copper (-18.5% y/y), ferro-alloys (-20.7% y/y), wine (+16.4% y/y) and nuts (+42.8% y/y) were the top 5 exported commodities. A 16.1% of exports was directed to the EU (-37.1% y/y), 50.5% to the CIS (+12.8% y/y) and 33.5% to other countries (+14.4% y/y).
In September 2019, petroleum (+2.6% y/y), cars (+8.4% y/y), copper (+1.9% y/y), pharmaceuticals (+22.4% y/y) and gases (+54.0% y/y) represented the top 5 imported commodities.
Overall, in 9M19, the trade deficit was down 11.6% y/y to US$ 3.8bn as exports were up 11.1% y/y to US$ 2.7bn and imports decreased by 3.3% y/y to US$ 6.5bn.
Producer price index up 11.2% y/y in September 2019
Annual PPI for industrial goods was up 11.2% in September 2019, according to Geostat. Rising prices in manufacturing (+11.9% y/y) and mining products (+21.5% y/y) contributed the most to the overall index change.
