TBC Capital published weekly Update from the Chief Economist. According to the report, April seasonally adjusted GDP growth print came in at very strong 2.8% MoM. At the same time, May CPI inflation pressures were slightly, but still higher than projected, with expected contribution of housing rentals on the back of the elevated demand from migrants.
"We will update 2022 year outlook key macro variables in the coming days with growth from “stronger than 5.5%” to likely up to around 7.5 % and EOP CPI inflation still probably close to 9.5% being projected almost a month ago.
As for the GEL, we stick to our view, that an appreciation pressures should hold. At the same time, unless the USD weakens worldwide, what looks unlikely though only in the near term, we would still bet on higher reserve accumulation of the central bank, rather than sharp appreciation of more than what was lately evident. Also, as after the NBG intervention on 24th of May the depreciation pressures were short lived, we think further interventions won’t change the sentiments as quickly.
Last week was also notable as the NBG Financial Stability Committee had another scheduled meeting and the Ministry of Finance submitted an updated macro projections to the Parliament. The regulator has left the countercyclical buffer unchanged, at 0%. The MoF 2022 growth outlook was also unchanged from the previous, November 2021 one at 6%, while the deficit was lowered from 4.5% to 3.5%.
The GEL treasury securities data was also published, with further slight decrease of nonresidents’ share", - TBC Capital said.
