Real GDP growth was 9.2% y/y in May-24
Georgia’s economy grew by 9.2% y/y in May-24, after growing by 11.8% in previous month. Cumulatively, real GDP growth reached 9.3% y/y in 5M24. The ICT, professional & scientific activities, financial & insurance, construction and transport were the primary drivers of growth in May. Considering stronger-than-expected growth in 5M24, we raised our real GDP growth forecast to 7.0% from 6.0% for the full-2024 year (see updated macro forecasts here).
Bank lending increased by 19.0% y/y in May-24
In May-24, the banking sector loan portfolio increased by 19.0% y/y (+1.4% m/m), excluding FX effect, after a 18.4% y/y growth in previous month. In unadjusted terms, loan portfolio rose by 23.3% y/y (+3.4% m/m), reaching GEL 56.4bn (US$ 20.2bn), after growing 21.8% y/y in Apr-24. Sector-wise, corporate loans saw a substantial rise of 23.2% y/y (excluding FX effect), while retail loans increased by 15.7% y/y. Loan dollarization rose to 45.6% (+0.97ppts y/y and +0.88ppts m/m) in May-24.
On the deposits side, there was a 12.2% y/y increase (excluding FX effect) to GEL 53.0bn (US$ 18.9bn) in May 2024, following a robust 17.7% y/y growth in the previous month. In terms of currency breakdown, GEL deposits increased by 18.1% y/y and FX deposits (exc. FX effect) were up 6.3% y/y. As a result, the level of deposit dollarization reached 49.8% (-0.69ppts y/y and +1.54ppts m/m) in May-24.
CA deficit reduced to 5.0% of GDP in 1Q24
The Current Account (CA) deficit decreased by 5.5% y/y to 5.0% of GDP in 1Q24, down from 5.8% in 1Q23, according to NBG. This improvement was driven by strong growth in the transfer balance increasing by 20.3% y/y to US$ 875mn, followed by the service balance (+3.2% y/y to US$ 690mn). The merchandize trade deficit, traditionally the major contributor to deficit creation, increased by 8.4% y/y to US$ 1.5bn, as exports decreased by 9.8% y/y and imports were down 2.1% y/y. Notably, the positive balance in transfers and services fully offset the trade deficit in 1Q24.
We project CA deficit at 5.6% of GDP in 2024, up from 4.4% of GDP in 2023.
