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Georgia Country Report - May, 2018

  • ID: 4530571
  • Country Profile
  • Region: Georgia
  • 39 Pages
  • Emerging Markets Direct
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Georgia, the small South Caucasus country of 3.9mn, expanded by 5.6% y/y in March. Preliminary data shows GDP accelerated through the first quarter of this year, rising from 4.4% in January and 5.5% in February, to average at 5.2% y/y for the quarter. The expansion in March was driven by a rise in activity in manufacturing, transport, real estate and trade, and “other community, social and personal service activities”.

The economy achieved 5% growth in 2017. The Georgian economy has bounced back from several years of slow growth across 2015-2016, when a depressed economic environment in the region and low oil prices indirectly impacted its performance. Multilateral development banks all expect the country's GDP growth to exceed 4% in the near-term, up from 2.7-2.8% in 2015-2016.

The growth spurt was prompted by a flurry of domestic and foreign investments in construction, retail, infrastructure and real estate amidst a recovery in consumption levels and an increase in inbound tourism. However, structural imbalances continue to plague Georgia's macroeconomy, most notably its large trade deficit, which is financed partly with external borrowing, and its unpredictable currency, the exchange rate of which has varied widely. That has pushed consumer price inflation above the government's 5% target.

Georgia's foreign trade deficit inched upwards to $5.25bn in 2017, up from $5.18bn in 2016, and by 17.5% y/y to $1.34bn in the first quarter of 2018. Imports, which are larger in absolute terms, surged by 35% to $838mn while exports rose 33% to $294mn.

Reducing the foreign trade and overall current account deficit has been an ongoing concern in Tbilisi. An oil and gas-importing country, Georgia has struggled to expand its manufacturing base enough to make up for its sizeable energy imports and for its imports of higher added-value goods.

Meanwhile, consumer prices were at stable 2.8% y/y in March, on a par with the 2.7% y/y registered in February. The numbers are the lowest recorded monthly CPI levels seen in Georgia since December 2016. March's inflation levels are well within the government's target rate of 5% for 2018.

On the political front, Georgia’s billionaire former prime minister Bidzina Ivanishvili is to return to politics at the helm of the Georgian Dream party he founded in 2012. It’s not clear whether Ivanishvili plans to take a formal role within the government. This in the view of opposition parties may not make much difference to the political situation, since many claim he is still the power behind the scenes despite stepping out of the political arena in 2013. Meanwhile, democracy in Armenia and Georgia deteriorated slightly in 2017, Freedom House concludes.

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1.0 Executive summary

2.0 Politics
2.1 Billionaire Georgian Dream founder Ivanishvili to return to politics
2.2 Political hostility to journalists intensifies from Central Europe to Eurasia
2.3 Former Georgian minister found guilty in torture case
2.4 Georgian president reassures EU leaders on commitment to contain wave of asylum seekers
2.5 Democracy in Armenia and Georgia deteriorated slightly in 2017, Freedom House concludes
2.6 Polls & Sociology

3.0 Macro Economy
3.1 Macroeconomic overview
3.2 Macro outlook

4.0 Real Economy
4.1 Industrial production
4.2 Inflation
4.2.1 CPI dynamics
4.2.2 PPI dynamic
4.3 Fixed investment
4.4 Labour and income
4.4.1 Unemployment, income dynamics
4.4.2 Retail sector dynamics

5.0 External Sector & Trade
5.1 Balance of payments, current account
5.1.1 Import/export dynamics
5.1.2 Current account dynamics
5.1.3 Capital flows
5.1.4 Gross international reserves
5.2 FTA
5.3 FDI

6.0 Public Sector
6.1 Budget
6.1.1 Budget dynamics - funding, privatization
6.2 Debt

7.0 FX

8.0 Financial & capital markets
8.1 Bank sector overview
8.1.1 Earnings
8.1.2 Loans
8.1.3 NPLs
8.1.4 Banks specific issues
8.1.5 Bank news
8.2 Central Bank policy rate
8.3 Stock market
8.4 International ratings
8.5 Fixed income
8.5.1 Fixed income - bond news

9.0 Industry & Sectors
9.1 Sector news
9.1.1 Oil & gas sector news
9.1.2 Transport sector news
9.1.3 Construction sector news
9.1.4 Tourism sector news
9.1.5 TMT sector news
9.1.6 Agriculture sector news
9.1.7 Renewable energy sector news
9.1.8 Metallurgy & mining sector news
9.2 Major corporate news
9.2.1 Oil & gas corporate news
9.2.2 Transport corporate news
9.2.3 Retail corporate news
9.2.4 Construction corporate news
9.2.5 Tourism corporate news

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