NBG kept its key rate unchanged at 10.5%
The NBG kept its key rate unchanged at 10.5% on 21 June 2023 meeting, after cutting by 50bps in May-23. According to the NBG, reduction in inflation (1.5% in May-23) is mainly driven by a decrease in imported inflation and tight monetary policy. The regulator commented that despite slowdown in domestic inflation its level remained high at 9.1% in May. While no indications of a wage-price spiral observed, the NBG remains cautious about inflationary risks arising from the labor market, as wage growth outpaces productivity growth. Based on NBG’s current forecast, annual inflation expected to remain below the target throughout 2023, with anticipated policy rate reductions occurring at a moderate pace. The next committee meeting is scheduled for 2 August 2023.
Georgia’s economy increased by 7.7% y/y in 1Q23
Geostat revised 1Q23 real GDP growth upwards to 7.7% y/y, from the preliminary estimate of 7.2% y/y. In terms of economic sectors, high contributions to the growth in 1Q23 came from trade (+14.0% y/y), ICT (+44.2% y/y), construction (+15.1% y/y), public administration (+10.5% y/y), education (+13.4% y/y), art, entertainment and recreation (+17.2% y/y), hospitality (+15.7% y/y) and financial intermediation (+6.9%). Meanwhile, manufacturing (-6.6% y/y), healthcare (-12.7% y/y), mining (-10.8% y/y) and agriculture (-2.3% y/y) sectors contracted in 1Q23.
Producer price index decreased by 5.8% y/y in May-23
Annual PPI for industrial goods decreased by 5.8% in May-23, after falling by 6.0% in previous month, according to Geostat. This decline was mainly driven by price reduction in manufacturing sector (-4.8% y/y), followed by mining (-12.2% y/y).
