Weekly Market Watch
Annual inflation at 0.9% in Aug-23
Annual CPI inflation rose to 0.9% in Aug-23 from the previous month’s 0.3%. This increase was primarily driven by a slowdown in the reduction of inflation rates for imported and mixed goods, which decreased to -5.8% y/y (compared to -7.4% y/y in Jul-23) and -1.9% y/y (compared to -4.5% in Jul-23), respectively. Additionally, domestic goods inflation stood at 6.1% y/y, down from 7.2% in July. Notably, core inflation (non-food, non-energy, non-tobacco) reduced further to 2.5% (-0.6ppts m/m) in August, marking the first time it has fallen below 3.0% since Aug-19. By categories, annual inflation was mostly driven by price changes in transport (-7.9% y/y, -0.94ppts), healthcare (-7.3% y/y, -0.72ppts), food and non-alcoholic beverages (+2.4% y/y, +0.76ppts) and utilities (+5.0% y/y, +0.52ppts). On a monthly basis, there was a 0.3% inflation in Aug-23, driven by price increase in food and non-alcoholic beverages (+2.1% m/m, +0.69ppts) and transport (+1.6% m/m, +0.19ppts) categories.
FDI in Georgia stood at US$ 505.7mn in 2Q23
FDI in Georgia increased by 29.9% y/y to US$ 505.7mn, according to Geostat’s preliminary figures. This rise in FDI is attributed to a surge in reinvestments (+59.1% y/y to US$ 422.5mn, 83.5% of total), while the equity component decreased (-23.3% y/y to US$ 72.9mn).
The financial sector was the largest FDI recipient at US$ 255.7mn (+322.9% y/y, 50.6% of total), followed by electricity supply at US$ 137.2mn (+27.1% y/y, 27.1% of total), manufacturing at US$ 35.6mn (-26.5% y/y, 7.0% of total) and trade at US$ 34.9mn (-60.7% y/y, 6.9% of total).
The UK topped the list of investors with US$ 168.3mn (33.3% of total FDI), followed by Türkiye (US$ 71.0mn, 14.0% of total), the Netherlands (US$ 62.7mn, 12.4% of total) and Czech Rep. (US$ 55.6mn, 11.0% of total).
Overall, in 1H23, FDI in Georgia increased by 10.9% y/y to US$ 1.1bn, which is equivalent of 7.7% of GDP.
International reserves at US$ 5.4bn in Aug-23
Gross international reserves increased by 27.6% y/y to US$ 5.4bn in Aug-23, according to NBG. On a monthly basis, the reserves were up slightly by US$ 0.75mn. Changes in reserves were attributed to the government and banking sector FX operations, likely also to NBG’s FX purchases (information will be available on 25 September).
Tourism revenues estimated at US$ 550mn in Aug-23
According to our estimates, tourism revenues increased by 5.2% y/y, reaching US$ 550mn in Aug-23. Overall, tourism revenues reached US$ 2.9bn (+34.7% y/y) in 8M23, based on our estimate.