Real GDP grew by 7.5% y/y in Apr-23
Georgia’s economy continued strong growth, with real GDP up by 7.5% y/y in Apr-23, after 7.3% y/y growth in previous month, based on Geostat’s rapid estimates. Cumulatively, real growth came in at 7.3% y/y in 4M23. The observed growth in April was mainly driven by construction, financial, trade, ICT and transportation and storage sectors. Meanwhile, manufacturing and real estate sectors contracted. We forecast Georgia’s economy to grow by 5.8% in 2023 (see macro forecasts in detail here).
Inflation retreated further to 1.5% in May-23
Annual CPI inflation retreated to 1.5% in May-23 from 2.7% inflation in previous month. This decline was primarily attributed to a reduction in inflation for imported goods (-6.5% y/y) and mixed goods (-4.2% y/y). Additionally, there was a slowdown in domestic inflation (+9.1% y/y in May vs. +10.6% y/y in April). Core inflation (non-food, non-energy, and non-tobacco) also reduced to 3.9% (-0.8ppts m/m) in May. By categories, annual inflation was mostly driven by price changes in transport (-12.9% y/y, -1.64ppts), healthcare (-7.5% y/y, -0.73ppts), food and non-alcoholic beverages (+3.3% y/y, 1.19ppts), alcoholic beverages and tobacco (+7.1% y/y, 0.48ppts), restaurants and hotels (+11.1% y/y, 0.41ppts) and housing, water, electricity, gas and other fuels (+3.7% y/y, 0.39ppts). On a monthly basis, there was a 0.1% deflation in May-23, driven by price reduction in food and non-alcoholic beverages (-1.7% y/y, -0.62ppts) category.
We expect disinflation to continue and forecast average annual inflation at 3.1% for the entire year and end-2023 inflation at 1.0%.
NBG sold US$ 17.1mn
On 2 June 2023, NBG intervened in the FX market and sold US$ 17.1mn out of offered US$ 40mn, likely to limit one-off pressure on GEL. This was 1st FX intervention on the sell side in 2023. Notably, the NBG is a net buyer of US$ 765.8mn year-to-date.
