19.Nov .2019 18:35

Growth of exports, tourism and remittance inflows recovered to 6.1% in October

views 206

TBC research published monthly update. According to research, the growth of exports, tourism and remittance inflows recovered to 6.1% in October, having slowed to 0.5% in the previous month in USD terms. Higher tourism (+5.2% YoY) and exports (+4.5%) were predominantly behind the recovery of growth, but remittances also remained strong with a 11.7% YoY increase.

The weaker growth of imports in October (- 2.1% YoY) also supported the external balance. Although imports increased moderately, by 4.0% YoY in September in USD terms, this was primarily on the back of higher one-off imports of petroleum and transportation, which likely waned in October.

Already in October, the number of tourists visiting Georgia rose by 7.8% YoY and estimated inflows increased by 5.2% in USD terms, the latter having fallen by an estimated 6.9% YoY in Q3.

This recovery was supported by a further acceleration of the growth of visitors from the EU, the strong contribution of visitors from Armenia (+12.7% YoY), Turkey (+16.9 YoY) and Azerbaijan (+7.7% YoY), and the sharp expansion of tourists from Israel (+56.9% YoY) and other Middle East and Central Asian countries.
It should be noted that tourism inflows from the EU surpassed those from Russia for the first time in September, a trend that likely continued in October as well. The increasing number of direct low-cost flights connecting Georgia to Europe will continue to support the growth of the industry and increase the share of more stable markets in the total numbers of visitors.

Following the improvements in the previous quarters, trade and the estimated balance of major components of the current account both indicate further improvement in Q3 as well as in October. In particular, the estimated balance of trade in goods, tourism and remittance inflows improved by around 60 million USD in Q3 and by additional 50 mln USD in Oct 2019 compared to the same period a year ago.

Although Q3 FDI data are not yet released, based on projections, FDI is likely down in Q3 YoY, but not necessarily QoQ, being close to new lower levels of around 5-6% of GDP, without large-scale projects.

Assuming around 50% YoY drop in Q3 FDI, the external sector can still be assessed as being broadly balanced, with strengthening dynamics observed in October.