TBC Capital published an Update From The Chief Economist. According to the report, July growth print came in at 9.7%, broadly in line with TBC Capital's latest double digit growth baseline for the full year 2022. The inflows remain strong, while the fiscal stance, except some pick-up in deficit lately, is contractionary. On the credit side, July was weak, however, large repayment in the corporate sector should be taken into
account.
"Based on our nowcasting model, we expect YoY growth to strengthen already in August. Also, after the estimated monthly seasonally adjusted outstanding JanuaryApril activity, the well-expected normalization in May-July should likely end in August", - the document reads.
As of the report, besides growth, in fact in the first place, August is noticeable with the start of the reversal in the inflation dynamics. Namely, the seasonally adjusted annualized CPI inflation stood at -0.1%, probably the deflation being only marginally, but still softer than expected.
"Nevertheless, we keep our YE outlook of 7.4% or possibly even lower inflation unchanged as in coming months we expect stronger passthrough from the commodity prices and the GEL. At the same time, domestic price dynamics are so far somewhat more sticky, though in this regard, as outlined in our article on overheating, we are not believers of material deviation from general trend", - TBC Capital reads.
