Real GDP grew by 6.9% y/y in September 2021
Georgia’s economy grew by 6.9% y/y in September, slower than in August, based on Geostat’s rapid estimates. Notably, real GDP of September 2021 was also up by 6.1% compared to September 2019 level. Cumulatively, in 9M21, growth is estimated at 11.3% y/y, surpassing 9M19 level by 4.8%. In September, economic activity was up in all sectors except construction. The growth was fuelled by government spending, robust credit growth, strong remittances and continued recovery in tourism.
Corporate bank lending growth accelerated further in Sep-21
In Sep-21, the banking sector loan portfolio growth came in at 15.8% y/y (+2.5% m/m), excluding FX effect, after a 15.3% y/y growth in previous month. In unadjusted terms, loan portfolio was up 12.7% y/y (+2.3% m/m), amounting to GEL 41.0bn (US$ 13.1bn). By sector, corporate loan growth accelerated further to 16.9% y/y (exc. FX effect) in September, from a 15.6% y/y growth in previous month, while retail loan growth remained almost unchanged at 14.8% y/y. In Sep-21, loan dollarization reduced further to 51.4% (-5.54ppts y/y and -0.29ppts m/m) and NPLs stood at 2.2% (-0.12ppts y/y and -0.05ppts m/m).
Bank deposits grew by 12.7% y/y (+1.3% m/m, exc. FX effect) to GEL 35.9bn (US$ 11.5bn) in Sep-21, with GEL deposits up 11.6% y/y and FX deposits up 13.3% y/y (exc. FX effect). The deposit dollarization stood at 60.7% (-0.86ppts y/y and +0.63ppts m/m).
Tbilisi residential property price index up y/y and down q/q in 3Q21
Residential property price index (RPPI) was up 8.9% y/y in 3Q21, after a 10.1% y/y growth in previous quarter, according to Geostat. Notably, flats price growth remained almost unchanged at 7.3% y/y, while detached houses price growth slowed to 13.5% y/y after rising 17.9% y/y in previous quarter. On a quarterly basis, prices fell in both segments, down 4.6% q/q for detached houses and down 1.8% q/q for flats, which led to a 2.5% q/q drop in total RPPI in 3Q21.
NBG kept its key rate unchanged at 10.0%
The NBG kept the key rate unchanged at 10.0% on 27 October 2021 for the 2nd time, after raising it by 50bps in August. The central bank said that increased inflation remains a challenge for Georgia, as consumer prices increased by 12.3% in September, and expected to remain high through Feb-22. The regulator sees that key sources of high inflation being one-off factors, such as significant increases in prices of food and oil on international markets and the rapid growth of international transportation costs, noting also pend-up demand and a high lending growth. The NBG also stressed positive developments and revised the 2021 growth projection upwards to 10.0% from 8.5%. According to the NBG’s current forecast, inflation expected to decline from spring 2022, supported by tight monetary policy and fiscal consolidation along with the fade-out of one-off exogenous factors. Notably, the NBG does not rule out further rate hikes if the inflationary risks materialize in case of strong supply shocks. The next committee meeting is scheduled for 8 December 2021.
