Real GDP growth was 5.1% y/y in Sep-23
Georgia’s economy grew by 5.1% y/y in Sep-23, in line with our expectation. Cumulatively, real growth came in at 6.8% y/y in 9M23. The growth in September was primarily driven by the financial, construction, trade and hotels & restaurants sectors. In contrast, the manufacturing, transportation & storage and real estate sectors contracted during the same period. We maintain our growth forecast at 6.8% for the full year 2023 and at 5.0% for 2024 (see macro forecasts here).
Annual inflation at 0.8% in Oct-23
Annual CPI inflation saw a slight rise to 0.8%, from the previous month’s 0.7%. A notable development in October was the drop in food and non-alcoholic beverages prices, marking the first decline since Nov-16. This reduction in food prices almost balanced out the upward pressure caused by the increase in oil prices. On aggregate level, in October, both imported and mixed goods inflation stayed in negative territory, and domestic inflation continued its anticipated decrease (+4.5% y/y in Oct-23 vs +5.3% y/y in Sep-23). Notably, core inflation (non-food, non-energy, non-tobacco) reduced to 2.1% y/y vs 2.5% y/y in Sep-23. By categories, annual inflation was mostly driven by price changes in food and non-alcoholic beverages (-1.2% y/y, -0.42ppts), healthcare (-3.2% y/y, -0.33ppts), alcoholic beverages & tobacco (+6.6% y/y, +0.45ppts), utilities (+4.2% y/y, +0.43ppts) and transport (+1.2% w/w, +0.22ppts) categories. On a monthly basis, there was a 0.6% inflation in Oct-23, driven by price increase in transport (+3.6% m/m, +0.45ppts) category.
We forecast average annual inflation at 2.7% for 2023 and 3.5% for 2024.
Tourism revenues at US$ 1.45bn in 3Q23
In 3Q23, tourism revenues increased by 5.3% y/y to US$ 1.45bn, based on NBG. The top source of tourism revenues was Russia, contributing US$ 285.3mn (19.7% of total), following Türkiye at US$ 220.5mn and the EU at US$ 212.0mn. Overall, tourism revenues reached US$ 3.25bn (+29.2% y/y) in 9M23. We forecast tourism revenues at US$ 4.2bn (+19.0% y/y) for the full year 2023 and at US$ 4.5bn (+7.0% y/y) in 2024.
