Exports up 14.6% y/y in August 2021
In August 2021, exports increased by 14.6% y/y to US$ 335.3mn after a 40.6% y/y growth in previous month. Meanwhile, imports growth accelerated in August, up 26.1% y/y to US$ 838.3mn, after growing 18.3% y/y in previous month. Notably, both exports and imports were also up compared to August 2019 levels – exports up 6.1% and imports up 5.1%. As imports growth surpassed exports, trade deficit increased by 35.1% y/y in August. Overall, in 8M21, trade deficit was up by 17.2% y/y to US$ 3.5bn, as exports increased by 25.7% y/y to US$ 2.6bn (up 7.2% compared to 8M19) and imports increased by 20.7% y/y to US$ 6.1bn (up 1.2% compared to 8M19).
Money transfers up 11.2% y/y in August 2021
In August 2021, money transfers increased by 11.2% y/y to US$ 204.9mn, after growing 10.4% y/y in previous month, according to NBG. Notably, remittances were also up by 39.9% compared to August 2019. From major remitting countries, money transfers increased strongly from Italy (+20.3% y/y, 16.4% of total), Russia (+7.8% y/y, 18.4% of total), USA (+11.7% y/y, 12.0% of total), Israel (+16.7% y/y, 8.1% of total) and Germany (+47.6% y/y, 4.9% of total). Meanwhile, from major remitting countries, money transfers declined from Greece (-6.4% y/y), Turkey (-3.0% y/y) and Ukraine (-30.9% y/y). Overall, in 8M21 money transfers were up 31.0% y/y to US$ 1.5bn (+35.2% compared to 8M19).
Real GDP growth at 29.9% in 2Q21
Georgia’s 2Q21 real GDP growth came in at 29.9% y/y (up 12.7% compared to 2Q19), based on Geostat, unchanged from the rapid estimate figure. This growth reflected significant increased activity in trade (+53.9% y/y), manufacturing (+42.3% y/y), art & recreation (+133.6% y/y), transport (+47.0% y/y), construction (+36.9% y/y), accommodation and food services (+75.5% y/y), real estate (+17.7% y/y) and financial and insurance (+45.5% y/y). Meanwhile, real growth was down in agriculture (-2.3% y/y) and education (-1.4% y/y). Based on preliminary estimate, Georgia’s economy grew by 12.2% y/y in 7M21 (down 4.5% y/y in 1Q, up 29.9% y/y in 2Q and up 9.9% y/y in July). This implies that real GDP also exceed its 2019 level by 5.4% in 7M21.
NBG kept its key rate unchanged at 10.0%
The NBG kept the key rate unchanged at 10.0% on 15 September 2021, after raising it by 0.5ppts in August. The central bank said that 12.8% annual inflation rate of August had exceeded the forecast, and expects the inflation to remain high for the rest of the year. It cited one-off exogenous factors as the key driver of the high inflation, including the sharply increased prices of food and oil in the international markets, contributing around 9.0 percentage points to inflation. Based on NBG, despite the recent GEL appreciation in August, imported inflation (18.7% y/y) was significantly higher than the increase in domestic goods prices (8.2% y/y). According to the NBG’s current forecast, inflation is expected to decline significantly from spring 2022, supported by tight monetary policy and fiscal consolidation along with the fade-out of one-off exogenous factors. The next committee meeting is scheduled for 27 October 2021.
