NBG cuts the key rate to 10.0%
The NBG cut its key rate by 25bps to 10.0% on 13 September 2023 meeting, the 3rd rate cut this year. According to NBG, external factors contributing to inflation in Georgia eased significantly, and there are early signs of neutralizing demand-side inflation pressures as economic growth rate approached its potential level. Simultaneously, domestic inflation continued to decelerate, coming at 6.1% in Aug-23, down from 14.2% in Jan-23. Based on NBG’s current projections, inflation is anticipated to stay below the 3.0% target level in the upcoming months and stabilize around it in the medium term. NBG plans to normalize monetary policy at a moderate pace. The next committee meeting is scheduled for 25 October 2023.
Goods exports up 4.0% y/y in Aug-23
In Aug-23, goods exports increased by 4.0% y/y to US$ 492.1mn, after a 0.7% y/y decline in previous month. Goods imports were up by 0.9% to US$ 1.3bn in August, after growing by 2.8% y/y in July. Consequently, the trade deficit decreased by 1.0% y/y to US$ 781.9mn, after a 5.7% y/y growth in July.
Overall, in 8M23, trade deficit increased by 20.3% y/y to US$ 5.9bn, as exports increased by 14.3% y/y to US$ 4.1bn, while imports were up by 17.8% y/y to US$ 9.9bn.
Money transfers down 14.1% y/y in Aug-23
Money transfers reduced by 14.1% y/y to US$ 287.0mn in Aug-23, according to NBG. From major remitting countries, transfers reduced from Russia (-45.6% y/y and -18.3% m/m, accounting for 21.0% of total) and Israel (-6.7% y/y, 5.8% of total), while it increased from Italy (+23.0% y/y, 15.7% of total), USA (+37.6% y/y, 14.0% of total), Germany (+33.5% y/y, 7.1% of total), Greece (+6.0% y/y, 6.9% of total), and Kazakhstan (+54.9% y/y, 6.5% of total). Overall, in 8M23 remittances increased by 21.8% y/y to US$ 3.0bn.
Average monthly nominal wages up 17.1% y/y in 2Q23
In 2Q23, average monthly nominal wages in Georgia increased by 17.1% y/y to GEL 1,805, after growing by 18.7% y/y in 1Q23, according to Geostat. By economic activity, the highest monthly average wages were observed in the following sectors: information and communication (GEL 3,800, +22.2% y/y), financial and insurance (GEL 3,181, +19.1% y/y), construction (GEL 2,590, +18.9% y/y), professional and scientific activities (GEL 2,525, +25.1% y/y), electricity supply (GEL 2,160, +20.8% y/y) and public administration (GEL 2,084, +17.2% y/y). The lowest average monthly wages were in education (GEL 1,049, +12.6% y/y), water supply (GEL 1,150, +24.2% y/y), agriculture (GEL 1,277, +22.3% y/y) and hotels and restaurants (GEL 1,378, +19.0% y/y) in 2Q23.
