Real GDP growth was 6.0% y/y in March 2019
Georgia’s economy increased by 6.0% y/y in March 2019 after growing 4.6% y/y in previous month, according to Geostat’s rapid estimates. Real growth was recorded in trade, transport, other community, social and personal activities and real estate operations. Meanwhile, construction continued to drag growth, likely impact of slowed residential building construction along with completion of BP gas pipeline project. From demand side, growth was supported by sizeable improvement in external balance boosting net exports. Overall, real GDP growth was 4.7% y/y in 1Q19. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.

Inflation was 4.1% y/y and 0.2% m/m in April 2019
Annual CPI inflation was 4.1% in April 2019 up from 3.7% in March 2019, according to Geostat. Core inflation (non-food, non-energy) was 3.6% in April 2019, while core inflation excluding tobacco was 1.4%, as excise tax induced growth in tobacco prices was significant. Annual price changes were driven by price increases in food and non-alcoholic beverages (+5.9% y/y, +1.82ppts), alcoholic beverages and tobacco (+21.1% y/y, +1.38ppts) and recreation and culture (+7.2% y/y, +0.41ppts) categories. On a monthly basis, there was 0.2% inflation in April 2019, affected by price increase in food and non-alcoholic beverages (+0.7% m/m, +0.21ppts).

NBG keeps monetary policy rate unchanged at 6.5%
At its meeting on 1 May 2019, NBG’s monetary policy committee decided to keep its key rate unchanged at 6.5%. NBG commented that, inflation remained close to the target level of 3% since the beginning of 2019; Inflation reached 3.7% in March due to excise tax hikes on tobacco, contributing 1.3ppts in overall price growth. The NBG expects the inflation rate to remain close to its target level of 3% as one-offs fade away. With weak demand side inflationary pressures, the regulator sees room for gradual monetary normalization considering potential risks from external sector. The next committee meeting is scheduled for 12 June 2019.