Real GDP shrinks 11.5% y/y in January 2021
Georgia’s economic contraction widened to 11.5% y/y in January 2021, after a 7.9% y/y contraction in previous month. This is explained by lockdown measures plus a two-week holidays (January 1-15), along with last year’s high base. In January, positive growth was posted in information & communication and financial & insurance activities, while growth was down in construction, transportation, manufacturing, accommodation and food services, real estate and trade. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
NPLs at 2.5% in January 2021
In January 2021, the banking sector loan portfolio increased by 8.9% y/y and reduced slightly by 0.2% m/m, excluding FX effect. In unadjusted terms, loan portfolio was up 19.6% y/y (-0.1% m/m), amounting to GEL 38.2bn (US$ 11.6bn). By sector, corporate lending increased by 7.9% y/y, while retail loan growth was 9.8% y/y (exc. FX effect). Notably, newly issued mortgages increased by 4.6% y/y, bringing mortgages stock growth to 10.8% y/y (exc. FX effects). In January 2021, loan dollarization stood at 55.4% (+0.31ppts y/y and +0.17ppts m/m) and NPLs stood at 2.5% (+0.38ppts y/y and +0.28ppts m/m).
Bank deposits increased by 20.7% y/y (+0.4% m/m, exc. FX effect) to GEL 34.9bn (US$ 10.6bn) in January 2021. By currency, GEL deposit growth was 38.4% y/y, while FX deposit increased by 10.5% y/y (exc. FX effect). The deposit dollarization stood at 61.5% (-1.87ppts y/y and +0.06ppts m/m).
S&P Global affirms Georgia at BB
On 26 February 2021, S&P affirmed Georgia’s sovereign credit rating at BB. The Outlook was revised to Negative from Stable, reflecting risks to Georgia’s ability to generate adequate FX earnings to service its sizable external liabilities over forecast horizon, slow recovery in the tourism sector and weak medium-term outlook for foreign investment inflows. Based on S&P, Georgia’s ratings are supported by Georgia’s relatively strong institutional arrangements when compared regionally, its floating exchange rate regime and the availability of timely, concessional financing from international financial institutions. S&P forecasts real GDP growth of 4.0% in 2021 in Georgia, supported by the relaxation of containment measures and continuation of some government support measures into 2021.
