01.Oct .2022 21:00

Galt & Taggart maintains 2022 baseline growth forecast for Georgia at 9.2%

Galt & Taggart maintains 2022 baseline growth forecast for Georgia at 9.2%
views 352

Georgia economy in August expanded by 10.5% y/y and by 10.3% overall in 8M22, reads the latest publication of Galt & Taggart on Monthly Economic Overview for August 2022, continuing "we maintain the 2022 baseline growth forecast at 9.2% and in optimistic scenario, we expect 2022 growth at 10.6%, if external inflows remain strong despite global slowdown in 2H. Growth in August was driven by transport, construction, IT services, hospitality and trade sectors, while manufacturing and real estate contracted".

Pursuant to the report, "headline CPI retreated for the 3rd consecutive month to 10.9% y/y in August, moderating from July’s reading of 11.5%. Energy and food prices continued to be primary drivers. Producer price index also retreated hinting on continued deceleration in price growth. Despite downward trend, inflationary pressures expected to last longer (end-2022F inflation at 9.2%).

The NBG kept its key rate unchanged at 11.0% in September meeting. The regulator expects some positive trends in international markets (reduction in oil prices, shipping costs and food prices) to be gradually transmitted to the local market and favorably affect the inflation dynamics. We expect monetary easing from 2Q23 in line with inflation slowdown.

The GEL strengthened 2.4% m/m vs dollar in September after losing some value in August; currency gained 8.2% year-to-date. Amid continued strong external inflows and expectations on NBG’s interventions to build reserves, we expect GEL to remain close to 3.0 vs dollar through end-2022".