Trade deficit down 12.2ppts m/m in February 2015

In February 2015, exports decreased 22.6% y/y to US$ 167.2mn, imports fell 3.5% y/y to US$ 571.2mn, and trade deficit increased 7.5% y/y to US$ 404mn (a 12.2ppts lower increase than in January 2015), according to foreign trade data released by GeoStat.

The negative trend in exports was mainly attributed to 32.6% y/y drop in re-exports. Georgia-originated exports somewhat recovered compared to January, falling 18.3% y/y (vs. a 30.2% y/y drop in Jan 2015).  Nuts (+246.9%), fertilizers (+40.6%), gold (+120.8%), and t-shirts (+76.7%) were the major Georgian exports expanding significantly, while a 45.7% y/y drop in car re-exports to CIS countries was the major reason dragging the re-exports. In February 2015, 28% of exports were directed to EU, 33% to CIS, and 39% to other countries. In other countries, USA (12.5% of total) and Turkey (7.5%) were the largest export destinations.

The 3.5% drop in imports was mainly attributed to a 10.5% y/y decrease in consumer goods imports, while capital and intermediate goods imports continued to grow, expanding by 7.8% y/y. In February gases (8.9%), cars (8.0%), petroleum (6.4%), pharmaceuticals (3.9%), and copper ores (3.6%) represented the top 5 imported commodities. 27% of imports originated from EU, 29% from CIS, and 44% from other countries. In other countries, Turkey (18% of total) and China (7.9%) were the largest trading partners.

NBG keeps the monetary policy rate unchanged at 4.5%

The Monetary Policy Committee of the National Bank of Georgia decided to keep the refinancing rate unchanged at 4.5% at its March 25, 2015 meeting. The monetary policy decision was based on the short term nature of existing inflationary risks stemming from external and internal factors. According to NBG’s current forecast, inflation will stay below 5% in 2015.

Loans/deposits continue growing, NPLs are low

Loans and deposits continued growing in February 2015, according to NBG. Excluding the exchange rate effect, the loan portfolio increased by 19.6% y/y (+36.3% y/y in unadjusted terms) to GEL 14.2bn (US$ 6.6bn). Deposits grew by 13.6% y/y, excluding exchange rate effect (+29.8% y/y in unadjusted terms), reaching GEL 12.4bn (US$ 5.7bn). Banking sector asset quality remains robust, with non-performing loans at 3.2% (unchanged m/m) in February 2015