28.Apr .2020 18:56

TBC Capital: despite a sizeable decline of exports, the trade balance improved by 6.8% YoY

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TBC Capital has published weekly bulletin. According to TBC Capital, PPI growth accelerated to 8.7% YoY in March 2020, up from 6.7% YoY in February 2020, hinting on the increasing inflationary pressure. Compared to the previous month, PPI rose by 3.0%, with prices growing sharpest for basic metals (+6.9% MoM) and beverages (+2.5% MoM).

The NBG sold 10-year GEL 40mln Treasury Notes on April 23, 2020, the yield of which equaled 10.24% (+0.78pp compared to the previous auction of TN with similar duration). The notes were allocated to the three of four auction participants.

Real Effective Exchange Rate (REER) was down by 2.6% MoM in March 2020 as it declined by 4.6% YoY. Changes in GEL real exchange rate with the main trade currencies were as follows: GEL/USD depreciated 7.8% YoY, GEL/EUR depreciated 4.8% YoY, GEL/TRY was down 3.1% YoY, while GEL/RUB appreciated 3.4% compared to March 2019.

Exports of goods fell by 22.1% YoY in March 2020 as exports to the CIS countries dropped sharply (-34.6% YoY) and exports to EU (-11.8% YoY) and other countries (-6.8% YoY) declined more moderately. Sharp decrease was observed for exports of cars (-37.5% YoY), medicaments (-87.0% YoY) and ferro-alloys (-64.4% YoY), while the exports of copper ores (+21.9% YoY) and hazelnuts (+30.4%) increased prominently.

Imports of goods also declined (-13.4% YoY), primarily reflecting falling imports of capital goods (-30.1% YoY) and intermediate supplies (-11.4% YoY). Lower imports of consumer goods (-14.4% YoY) and fuels (-12.9% YoY) also significantly contributed to the overall decline. On the other hand, imports of food products increased by 12.7% YoY, explained by one-off jump in demand relating to the uncertainties caused by COVID-19.

Overall, despite a sizeable decline of exports, the trade balance improved by 6.8% YoY or by around USD 30mln in absolute terms