Georgian economy grew by 5.8% y/y in August 2019
Economic growth in Georgia was 5.8% y/y in August 2019 after growing 6.1% y/y in the previous month according to Geostat’s rapid estimates. In August 2019, the growth was broad based with real growth recorded in construction, transport, other community, social and personal service activities, trade, manufacturing and hotels and restaurants sectors. Meanwhile, real growth was down in mining and electricity, gas and water supply sectors. Overall, real GDP growth was 5.0% y/y in 8M19. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
Inflation was 6.4% y/y and 1.7% m/m in September 2019
Annual CPI inflation was 6.4% in September 2019 up from 4.9% in August 2019, according to Geostat. Core inflation (non-food, non-energy, non-tobacco) was 3.2% up from 2.4% recorded in the previous month. Annual price changes reflected price increases in food and non-alcoholic beverages (+11.7% y/y, +3.49ppts), followed by alcoholic beverages and tobacco (+14.6% y/y, +0.97ppts) and transport (+3.9% y/y, +0.47ppts) categories. Meanwhile, prices were down in clothing and footwear (-5.5% y/y) and communication (-2.2% y/y) categories. On a monthly basis, there was 1.7% inflation in September 2019. Price increase in food and non-alcoholic beverages (+3.3% m/m, +1.03ppts) was the major driver of monthly inflation dynamics.
Government targets a 2.7% deficit in the 2020 draft budget
The government has submitted to the Parliament an initial draft of 2020 state budget, which sets economic growth at 5.0% and GDP deflator at 3.0% for 2020. Fiscal deficit is set at 2.7% of GDP, total expenditures at 30.6% of GDP, and taxes at 25.0% of GDP on the consolidated budget level (both slightly lower than 2019 figures relative to GDP). Total public debt to GDP is set at 45.0% (2019E 44.3%), reflecting reduced share of external debt (2020F 34.7% vs. 2019E 35.2%) and increased share of domestic debt (2020F 10.3% vs. 2019E 9.2%).
