Strong economic recovery dynamics until October will likely be halted by higher infection numbers and additional restrictions; USD/GEL rate stabilized recently but still likely remains undervalued – such is one assumption from TBC Capital as analyzed in its monthly watch on Tbilisi Residential Market.
In a macro snap-shot, TBC Capital highlights that economic growth dynamics continued to improve in September, showing a surprising improvement. GDP drop eased to 0.7% YoY in September, compared to 5.3% YoY and 5.5% YoY in August and July, respectively; however, increased infection numbers and additional restrictions imposed are likely to hamper the recovery pace in coming months. On the other hand, news about COVID-19 vaccine results are encouraging for economic recovery expectations going forward.
Another emphasis in on USD/GEL exchange rate. Here, TBC Capital says, exchange rate stabilized at around 3.29 after reaching its high of 3.40 by the beginning of November. Meanwhile, the major economic partners’ currencies, especially TRY and RUB, gained some value against the USD. “The NBG continued to intervene on the FX market selling in total 200mln USD in October and additional 127.2mln USD in November as of November 19“– reads the report.
As to the export-import dynamics, TBC Capital’s macro snapshot covers the fact that on exports’ side, inflows decreased slightly by 2.2% YoY in October after 8.6% YoY growth in October; remittance inflows’ growth also somewhat weakened but overall remained strong at 18.6% YoY. On the Imports’s side, imports of goods remain in negative as aggregate demand remains weak.
TBC Capital’s final emphasis falls on annual inflation, which remained unchanged at 3.8% YoY, while on a monthly annualized basis price growth somewhat exceeded the targeted 3%, likely reflecting the higher commodity prices and currency depreciation – the report concludes.
