Weekly Market Watch

IMF updates world economic outlook
On October 22, 2024, the IMF published its updated global economic outlook. The report indicates that global growth is expected to remain stable, with projected rates of 3.2% for both 2024 and 2025. Additionally, the IMF forecasts a gradual decline in global inflation, reducing from an average of 6.7% in 2023 to 5.8% in 2024 and further to 4.3% in 2025. Specifically for Georgia, the IMF projects a robust growth rate of 7.6% for 2024, followed by 6.0% in 2025, the highest in the region.

NBG kept its key rate unchanged at 8.0% 
On October 23, 2024, the Monetary Policy Committee of the NBG decided to maintain its key interest rate at 8.0%, despite the prevailing low inflation environment. This cautious approach reflects ongoing uncertainty, both domestically and globally, which continues to present risks. The ongoing conflict in Ukraine, coupled with escalating geopolitical tensions in the Middle East, could elevate regional risk premiums, which may lead to inflationary pressures through various channels, as noted by the regulator. Furthermore, stronger-than-expected growth domestically could also contribute to upward pressure on prices in the future. According to the NBG's current forecast, inflation is anticipated to remain below the target level in 2024, averaging around 1.2%, before stabilizing at approximately 3.0% in the medium term. The next committee meeting is scheduled for December 18, 2024.

Goods exports increased by 17.0% y/y in Sep-24 
In Sep-24, goods exports increased by 17.0% y/y to US$ 615.6mn, following a 30.1% y/y growth in previous month. In contrast, imports continued to decline, down by 4.2% y/y to US$ 1.3bn, after a 1.8% y/y decrease in previous month. Consequently, the trade deficit narrowed by 17.3% y/y to US$ 707.9mn in Sep-24. 
The top 5 exported commodities were cars (+43.9% y/y), spirits (+41.8% y/y), precious metals (+132.9% y/y), wine (-25.9% y/y) and nuts (+29.9% y/y) in Sep-24. A 7.8% of exports were directed to the EU (-18.0% y/y), 75.6% to the CIS (+34.1% y/y) and 16.6% to other countries (-15.2% y/y). The top 5 imports were cars (-32.5% y/y), petroleum (+1.5% y/y), pharmaceuticals (+21.6% y/y), bars & rods of iron (+176.0% y/y) and phones (-1.7% y/y) in September. 
Overall, in 9M24, trade deficit widened by 3.3% y/y to US$ 7.2bn, as exports increased by 4.1% y/y to US$ 4.8bn and imports were up by 3.6% y/y to US$ 12.0bn.

Producer price index increased by 8.8% y/y in Sep-24
Annual PPI for industrial goods rose by 8.8% in Sep-24, unchanged from the previous month. The annual growth was mainly driven by a rise in prices in the manufacturing (+8.1% y/y) and mining (+23.3% y/y) sectors.

NBG sold US$ 100mn 
On October 23 and 25, 2024, the NBG intervened in the FX market by selling US$ 60mn and US$ 40mn, respectively to mitigate the influence of non-fundamental factors and to address the usual market volatility that frequently occurs during the pre-election period, according to the regulator’s statement.