Real GDP shrinks 3.9% y/y in October 2020
Georgia’s economy contracted by 3.9% y/y in October 2020 after falling 0.7% y/y in September and 3.8% y/y in 3Q20, according to Geostat’s rapid estimates. In October, positive real growth was recorded only in financial and insurance activities, while it decreased in other sectors. Overall, real GDP contracted by 5.1% y/y in 10M20. Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
Inflation was 3.8% y/y and 0.9% m/m in November 2020
Annual CPI inflation was 3.8% in November 2020, unchanged since September 2020, according to Geostat. Core inflation (non-food, non-energy) came in at 5.1% in November 2020, while core inflation excluding tobacco was 4.8%. Annual price changes were driven by price increases in food and non-alcoholic beverages (+6.0% y/y, +1.92ppts) and health (+8.8% y/y, +0.71ppts) categories and price drop in transport (-5.2% y/y, -0.64ppts) category. On a monthly basis, inflation was 0.9% in November 2020.
NBG sold US$ 19.8mn
On 3 December 2020, the NBG intervened on the FX market and sold US$ 19.8mn out of offered US$ 25mn to limit GEL volatility. This was 25th FX intervention YTD for a total sale of US$ 843.2mn through FX auctions.
Government targets a 7.6% deficit in the 2021 final draft budget
The government has submitted to the parliament the final draft of 2021 budget, which sets economic growth at 4.3% (revised down from 5.0% in the initial draft) and GDP deflator at 3.8% (revised down from 4.0% in the initial draft) for 2021. Fiscal deficit is set at 7.6% of GDP with both operating expenditures (+3.8% y/y, 25.1% of GDP) and capital expenditures (+5.2% y/y, 8.1% of GDP) set to increase. The government expects a 9.0% y/y growth in tax revenues (22.5% of GDP). Total public debt to GDP is set at 60.1% (revised up from 55.9% in the initial draft) in 2021, reflecting US$ 500mn Eurobond refinancing and no growth in domestic debt.
