05.Jul .2022 14:00

Galt&Taggart On The Risks Of Overheating The Economy

Galt&Taggart On The Risks Of Overheating The Economy
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Georgian economy grew by 11.6% in May 2022, while the growth amounted to 11.2% and in 5 months of the current year. According to Geostat, the turnover of the private sector hit a record high, which amounted to GEL 10.2 billion in May, which was 25% more compared to the previous year.

According to Bochorishvili, the head of the research department of investment bank Galt & Taggart, t increased tourism, remittances and exports had a main impact on economic gorwth. Considering these factors, Galt & Taggart predict 10.6% economic growth in the country this year.

Eva Bochorishvili considers that there is no risk of overheating the economy so far.

"In June, as we expected, inflation has a tendency to decrease compared to May.

There is also a one-time factor in inflation, which is the effect of migrants on the increase in rental property prices.

With the expectation that the prices of food and oil will not rise further, we expect inflation to slow down, although inflation will still be higher than 9% this year.

We think that the effect of the strengthening of the GEL is not fully reflected in the prices, and this will also help to slow down the inflation in the coming months, however, if the inflation turns again, then we will probably need to take additional measures, for example, to further reduce the fiscal deficit next year, and it will also be necessary from the NBG's side.

Currently, the pace of lending is significantly behind the pace of economic growth. In our estimation, the pace of lending is healthy. Loans increased by 18.1% in May, slightly accelerated compared to April, this also has a certain impact on the demand, however, what we look at in relation to these economic parameters, we cannot say at this growth rate that it causes overheating," said Eva Bochorishvili.