Real GDP grew by 7.3% y/y in Mar-23
Real GDP growth accelerated to 7.3% y/y in Mar-23, from a 5.8% y/y growth in previous month, based on Geostat’s rapid estimates. Cumulatively, real growth came in at 7.2% y/y in 1Q23. The observed growth in March was mainly driven by construction, financial, transportation and trade sectors. Meanwhile, manufacturing, energy and real estate sectors contracted. Considering better-than-expected growth in 1Q23, we revised our 2023 baseline growth forecast upwards to 5.8% from 4.8% (see more here).
Tourism revenues more than doubled in 1Q23
In 1Q23, international visitors to Georgia more than doubled y/y to 1.1mn persons. This growth was mainly driven by a 183.8% y/y increase in tourist arrivals (c.79.3% of total arrivals), followed by same-day arrivals (+384.3% y/y). In 1Q23, tourist arrivals recovered at 95.8% of 1Q19 level, while same-day arrivals recovered at a lower rate of 48.8% of 1Q19 level, as Azerbaijan’s land border crossing remains limited since pandemic. Russia was the top source country by international arrivals (24.1% of total), followed by Turkey (20.3% of total), and Armenia (17.1% of total). Most visitors traveled to Georgia via land (67.0% of total), followed by air (32.1% of total).
According to NBG’s estimate, tourism revenues increased by 102.0% to US$ 795.4mn in 1Q23. We expect tourism revenues to increase by 15.0% y/y to US$ 4.0bn in 2023 (see more here).
Loan portfolio growth accelerated to 13.8% y/y in Mar-23
In Mar-23, the banking sector loan portfolio growth accelerated to 13.8% y/y (+1.6% m/m), excluding FX effect, after a 13.3% y/y growth in previous month. In unadjusted terms, loan portfolio increased by 3.6% y/y (+0.9% m/m) to GEL 44.9bn (US$ 17.5bn), after growing by 2.8% in February. By sector, corporate loans growth accelerated further to 11.8% y/y (+10.7% y/y in February, exc. FX effect) and retail loans growth remained unchanged at 15.7% y/y in March. Notably, the mortgages growth slowed to 11.7% y/y in March (+13.3% y/y in February). In Mar-23, loan dollarization reduced to 44.3% (-6.00ppts y/y and -0.10ppts m/m) and NPLs stood at 1.7% (-0.13ppts y/y and -0.13ppts m/m).
Bank deposits growth also accelerated, up by 30.4% y/y (+0.5% m/m, exc. FX effect) to GEL 43.3bn (US$ 16.9bn) in Mar-23, after a 29.5% y/y growth in February. By currency, GEL deposits growth accelerated to 33.7% y/y (+28.6% y/y in previous month) and FX deposits (exc. FX effect) increased by 28.1% y/y (+30.0% in previous month). Importantly, the deposit dollarization reduced further to 53.5% (-5.88ppts y/y and -1.25ppts m/m) in March, which is the lowest level since Nov-97.
NBG purchased US$ 219.6nm in Mar-23
In Mar-23, NBG purchased US$ 219.6mn through the BMatch platform, which is a record high monthly purchase. Overall, in 1Q23, NBG’s FX purchases reached US$ 460.5mn.
