Weekly Market Watch
Fitch revises Georgia’s outlook to Positive from Stable
On 27 January 2023, Fitch revised Georgia's outlook to Positive from Stable and affirmed the sovereign credit rating at 'BB'. Based on Fitch, the outlook partly reflects very strong GDP growth, a rise in international reserves, and fiscal outperformance in 2022. Moreover, Fitch underlines that Georgia’s macro-fiscal policy has remained sound, with relatively tight monetary policy, a reduction in fiscal deficit and public debt-to-GDP ratio in 2022. Fitch forecasts real GDP growth to moderate to 4.5% in 2023 and 5.0% in 2024. The agency anticipates that last year's migrant and capital inflows will not sharply reverse, partly due to the protracted nature of the war in Ukraine and as migrants become more integrated into the Georgian economy.
Loan portfolio growth was 12.1% y/y in Dec-22
In Dec-22, the banking sector loan portfolio growth slowed to 12.1% y/y (+2.4% m/m), excluding FX effect, after a 13.8% y/y growth in previous month, explained mainly by high base effect. In unadjusted terms, loan portfolio increased by 4.0% y/y (+2.7% m/m) to GEL 44.8bn (US$ 16.6bn), after growing by 5.4% in November. By sector, corporate loans growth was 8.7% y/y (+10.0% y/y in previous month, exc. FX effect) and retail loans growth stood at 15.4% y/y (+17.3% y/y in previous month). The mortgages increased by 12.2% y/y in December (+13.6% y/y in November). In Dec-22, loan dollarization reduced to 44.3% (-6.23ppts y/y and -0.32ppts m/m) and NPLs reduced to all-time low level of 1.7% (-0.22ppts y/y and -0.22ppts m/m).
Bank deposits growth remained strong, up by 29.6% y/y (+4.0% m/m, exc. FX effect) to GEL 44.3bn (US$ 16.4bn) in Dec-22, after a 29.7% y/y growth in previous month. By currency, GEL deposits increased by 30.3% y/y (+30.6% y/y in previous month) and FX deposits (exc. FX effect) by 29.2% y/y (same as in previous month). The deposit dollarization reduced further to 56.1% (-3.82ppts y/y and -0.62ppts m/m).
Residential property price index up 14.3% y/y in 4Q22
Tbilisi residential property price index was up 5.5% q/q and 14.3% y/y (+3.2% q/q and +10.7% y/y in previous quarter), according to Geostat. On a quarterly basis, prices increased for both flats (+3.8% q/q) and detached houses (+8.9% q/q) segment. On an annual basis, prices were up by 12.5% y/y for flats and up by 18.0% y/y for detached houses.